A parent company (Aco), whose only source of taxable income was foreign accrual property income from a non-resident subsidiary but which had losses because of issuing debt to the public, received rulings for the transfer of its losses to a domestic Profitco (held through an intermediate Holdco). This was to be accomplished by Holdco incorporating a new corporation (Lossco1), which would generate losses through triangular transactions between Aco, it, and a Newco incorporated by Aco, with Lossco1 (once it had generated those losses) being transferred on a s. 85(1) rollover basis to Profitco, and wound-up into Profitco on a s. 88(1) rollover basis.
In connection with the s. 88(1) winding-up, the Ruling Letter stated:
Lossco1 will be formally dissolved before the end of the first taxation year of Profitco commencing after the commencement of the winding-up of Lossco1. Lossco1 will file articles of dissolution with the appropriate corporate registry within a reasonable time after the winding-up resolution is passed.