2 May 2018 External T.I. 2017-0717831E5 - Alter ego trust in year of beneficiary's death -- summary under Paragraph 104(13.4)(b)

S. (i)(B)(I) of Element B in the formula in s. 104(6) ensures that no deduction is available to the an alter ego for any amount included in the trust’s income in the trust year ending with the death of the lifetime beneficiary because of the application of the deemed disposition rules in ss. 104(4) to (5.2). CRA agreed that, however, the alter ego trust is entitled to a deduction under s. 104(6)(b) for the amount of dividend income received by it that was made payable to that beneficiary prior to the death.