2024 Ruling 2024-1008821R3 F - Multi-wings split-up net asset butterfly 55(3)(b) -- summary under Paragraph 186(1)(b)

Under a two-wing split-up net asset butterfly, the five siblings who were the shareholders of the distributing corporation (DC) transferred their shares of DC on a s. 85 rollover basis to two transferee corporations (the TCs) formed respectively for four of the five siblings and for the fifth sibling, the two types of property were transferred on a pro rata and net asset rollover basis to the two TCs for consideration including TC preferred shares, those preferred shares were redeemed for notes, the TCs immediately established their first taxation year-ends and DC was wound up into the TCs under s. 88(2) (with the redemption notes being extinguished by operation of law and with any remaining CDA account flushed out using s. 88(2)(b)(i)). The timing of the first year-ends ensured no Part IV tax circularity issues.