26 January 2018 Internal T.I. 2017-0735771I7 - Application of paragraph 40(3.5)(c) -- summary under Paragraph 95(2)(e)

Canco realized a suspended loss when it contributed its shares of a controlled foreign affiliate (CCo) to another CFA (BCo). CRA found that such loss was not de-suspended when CCo was then liquidated into BCo, on the basis that s. 40(3.5)(c)(i) applied to the liquidation, which was viewed by CRA as a "merger" that resulted in the "formation" of BCo (notwithstanding that BCo as a corporate entity had already been in existence prior to the merger).