2004 Ruling 2004-0056921R3 - stock options; conversion of plans -- summary under Paragraph 7(3)(a)

The replacement of a SAR plan of a private-company (CCPC) employer with an agreement to acquire its preferred and common shares that is subject to s. 7 will not be an immediate taxable event. S.7(3)(a) will limit the recognition of any benefits that might arise as a result of this conversion, and the employees will not receive any amount as a result of the agreement to waive any rights under the SAR. Notwithstanding that the corporation will add to its stated capital account maintain in respect of the common shares and preferred shares an aggregate amount not exceeding its estimate of the current accrued liability owing to the executives under the SAR plan.