CRA ruled on pipeline transactions respecting common shares of Opco which the deceased held on death, in which:
- the estate transfers its common shares of Opco to the Newco newly-incorporated by it mostly in consideration for a demand note of Newco
- at least 12 months thereafter, Opco amalgamated with Newco.
- in connection with the amalgamation, Amalco designates, in its return of income for its first taxation year, an amount under ss. 87(11) and 88(1)(c) and (d) to bump the ACB of land that had been held (as capital property) continuously by Opco from before the date of the death until immediately prior to the amalgamation.
- the Newco note is gradually repaid over a period of at least one year after the amalgamation, with Amalco continuing to carry on the business.
CRA ruled inter alia that the bump was available having regard to the benefit of the s. 88(1)(d.3) rule.