Minister of National Revenue v. Steer, 66 DTC 5481, [1966] CTC 731, [1967] S.C.R. 34 -- summary under Capital Loss v. Loss

The taxpayer and his associate each received 1/4 of the shares of a petroleum company together with the royalty interest in consideration for guaranteeing 1/2 of the indebtedness of the company to a bank of $125,000. The taxpayer was called on his guarantee in 1957, deducted a loss of $62,500 for that taxation year, and after proving as a creditor in the company's bankruptcy received dividends in 1959 and 1961 for $6,109 and $3,200. Judson J. characterized the guarantee as a deferred loan to the company, part of which was recovered in bankruptcy, with the result that the taxpayer's loss was a non-deductible capital loss.