Does the character of a property (here, eligible capital property) acquired by a parent corporation on the winding-up of a wholly-owned subsidiary remain the same to the parent corporation after the winding-up? CRA responded:
Where a parent corporation acquires all of the issued and outstanding shares of the capital stock of a target corporation and the target corporation is wound up into the parent corporation shortly thereafter on a subsection 88(1) wind-up, the CRA generally considers that eligible capital property (as defined in section 54) owned by the target corporation retains its character to the parent corporation at the time of transfer to the parent corporation. Consequently, in such a situation, the cost of a property that is eligible capital property to the target corporation which is transferred to the parent corporation in the course of the winding-up is generally the "cost amount" (as defined in subsection 248(1)) of the property to the target corporation by virtue of the application of subparagraphs 88(1)(c)(ii) and 88(1)(a)(iii).