Two individuals, Mr. A and Mr. B wholly-own two corporations of equal value (A Inc. and B Inc.), which amalgamate. On the amalgamation, the two individuals, in addition to receiving equal numbers of shares of Amalco, also received an equal amount of cash from Amalco.
In appearing to accept that the cash did not preclude qualification of the amalgamation under s. 87(1), CRA stated:
Generally, the condition in paragraph 87(1)(c) would be satisfied in the circumstances of the hypothetical situation because all shareholders who owned shares of the capital stock of a predecessor corporation immediately before the amalgamation received shares of the capital stock of the corporation resulting from the amalgamation. Thus, in the event that the other conditions set out in subsection 87(1), including paragraph 87(1)(a), were also satisfied, the amalgamation of Corporation A and Corporation B could qualify as an amalgamation for the purposes of the provisions of section 87.