As the result of the winding up of a partnership that held shares of a small business corporation, one of the former partners has held undivided rights to the shares of the corporation for more than 24 months. Would the disposition of the undivided interest in the shares held by this shareholder qualify for the capital gains deduction pursuant to subsection 110.6(2).
In responding affirmatively, CRA stated:
[T]he term "share" used in the definition of "qualified small business corporation share" in subsection 110.6 includes an undivided interest in a share. Thus, a partner receiving undivided interests in shares held by a partnership in accordance with subsection 98(3) could be considered to hold shares of the corporation for the purpose of determining whether the recipient is entitled to the capital gains deduction … .
… [T]he shareholder has held the undivided interests in the shares for more than 24 months and will continue to hold them until their disposition. In addition, the corporation will be a small business corporation at the time of the disposition and throughout the 24-month period preceding the disposition.