A lump sum received by the taxpayer from another beneficiary of an estate to surrender all of the entitlements of the taxpayer under the estate (other than to receive certain property) was characterized as proceeds of disposition of a capital interest in a trust, so that the taxpayer’s capital gain, if any, was to be computed by comparing such proceeds minus and disposition expenses and the cost amount of the interest as defined under para. (b) of the definition in s. 108(1). In particular:
[T]here was no distribution of money or property by the trust to you. In this case, the cost amount of your capital interest would be based on the amount by which the amount of money held by the estate and the cost amount of the other property held by the estate exceeds the amount of the debts and obligations to pay an amount outstanding immediately before the time that is immediately before the time of disposition. To arrive at the cost amount of your capital interest, that excess should be multiplied by the fraction whose numerator equals the fair market value of your capital interest and whose denominator is the fair market value of all the capital interests in the estate. The cost amount for property is a concept that is defined in subsection 248(1) for each type of property.