After becoming insolvent, a company ("Standard") in the mortgages business established a partnership, transferred a mortgage portfolio to the partnership and, prior to the end of the partnership's first fiscal year, sold its 99% direct interest in the partnership to the taxpayer who then sold a portion of its partnership interest to other parties. S.18(13) deemed the partnership to have the same cost amount for the portfolio as Standard, with a result that losses generated on the sale of the portfolio were allocated to the taxpayer and the other partners, rather than to Standard.
Although, in the view of the majority, the acquisition of the partnership interest by the taxpayer was not part of the same series of transactions involving the establishment of the partnership and the transfer to it of the mortgage portfolio within the "common law" meaning of a series of transactions (i.e., transactions each of which is pre-ordained to produce a final result), that acquisition was part of the series in light of s. 248(10) given that the parties "knew of the Standard series and took it into account when deciding to complete the acquisition transaction". Therefore, given that the taxpayer acquired its interest primarily for the tax benefit (as was apparent from the significant disparity between that benefit and the expected returns from the operation and disposition of the portfolio, and the lack of involvement or knowledge of the other partners in such activities) the series of four transactions culminating in that acquisition also resulted in a tax benefit to the taxpayer and were avoidance transactions.