2017 Ruling 2016-0629511R3 - Post-Mortem Planning and Extraction of "Hard ACB" -- summary under Paragraph 84.1(2)(a.1)

CRA ruled on a pipeline involving Opco shares inherited by an individual whose ACB consisted of both “soft” ACB (attributable to V-Day value basis of the deceased and the deceased’s use of the capital gains deduction immediately before death) and “hard” ACB (attributable to the further step-up in the shares’ ACB under s. 70(5).) The proposed transactions entailed the s. 85(1) transfer by him to a Newco of his Opco shares for notes in an amount close to the transferred shares’ hard ACB and preferred shares as to the balance – followed by an amalgamation (or wind-up) of the Opcos over a year later and gradual repayment of the notes on a redacted timetable.