2 June 2011 STEPs Roundtable Q. 5, 2011-0401861C6 - 2011 STEP - Q.5 - Post-Mortem Planning and 84(2) -- summary under Subsection 84(2)

An estate engages in a "pipeline" strategy in which it disposes of its shares of ACo (having a stepped-up adjusted cost base under s. 70(5)) to a newly-incorporated holdco ("AHoldco") in consideration for a promissory note, and AHoldco applies an intercorporate dividend from ACo to repay the promissory note. CRA stated that the circumstances which "could" lead to the application of s. 84(2) included: the funds or property of ACO being distributed in a short time frame following the death of the deceased; and ACo having no business and instead holding mostly cash.