After preliminary transactions, ParentCo and its historic subsidiary, SubCo were to be the only partners of a general partnership (Partnership C); and Partnership C, ParentCo and SubCo’s newly-incorporated subsidiary, NewCo2 were to be the only partners of a second general partnership (Partnership D).
SubCo was then to be wound-up into ParentCo (so that Partnership C would be dissolved by operation of law on a s. 98(5) rollover basis) and then, at least one week later, NewCo2 was to be wound-up into ParentCo (so that Partnership D also would be dissolved by operation of law on a s. 98(5) rollover basis). CRA ruled that s. 88(1) would apply “on” the winding-up of SubCo, then of NewCo2, notwithstanding that articles of dissolution for each such corporation would not be filed until tax litigation with CRA was resolved.
CRA ruled that to the extent that Partnerships C and D cease to exist by operation of law upon the winding-up of SubCo into ParentCo, and the winding-up of NewCo2 into ParentCo, and provided that, within 3 months of each partnership ceasing to exist, ParentCo carries on alone the business of each such partnership using all the property of each such partnership that it received as proceeds of disposition for its interest in each such partnership, in the course of carrying on those businesses, the provisions of s. 98(5) will apply (including that there could be a s. 98(5)(c) bump of land or shares of a public company); and for greater certainty, the CRP will have a cost amount of nil.