Alternatively, a limited partnership between two individuals as limited partners and a corporation (Opco) as the general partner and which is the policyholder of an exempt life insurance policy on the life of each limited partner, is wound-up as described in s. 98(5) by each limited partner transferring their respective partnership interest to Opco under s. 85(1), so that the limited partnership ceases to exist and Opco carries on alone the former partnership business.
In either case, are the partnership’s proceeds respecting the distribution of the life insurance policies determined under s. 98(3) or (5), as the case may be, or under s. 148(7)? CRA stated:
[W]here a Canadian partnership that owns an interest in an exempt life insurance policy ceases to exist and all the requirements of subsection 98(3) or 98(5), as the case may be, are otherwise met, it is our general view that those provisions would take precedence over subsection 148(7) such that there would be a tax-deferred rollover of the exempt life insurance policy.