In connection with a limited partnership offering whose final closing was on December 31, 1993, the taxpayer bought units in the partnership for $18,000 and 18 common shares in a corporation for a dollar each. The partnership bought a stallion and a colt at the closing, and prepaid various expenses, thereby giving rise to a loss for the partnership's 1993 taxation year. As contemplated in the Offering Memorandum, two weeks later the partnership transferred its assets to the corporation in consideration for preferred shares, with the preferred shares then being distributed to the partners on the dissolution of the partnership. The taxpayer then sold his preferred shares to his RRSP, and used the cash proceeds to repay a loan that had financed his purchase of his partnership units.
The Minister argued that the taxpayer could not deduct his share of partnership losses (which were restricted farm losses) on the basis inter alia that there was no partnership. The partnership had been structured to dissolve before it would receive any returns - any returns from the business would necessarily come afterwards, from corporate dividends (after dissolution of the partnership): therefore, the alleged partnership was formed without a view to profit. Miller J. stated (at para. 72):
I disagree with the [Minister's] reasoning and logic and overly technical, rather than pragmatic, approach to [whether there was a view to profit]. In reading [Continental Bank] in a practical, commercially sensible manner, the question to ask is not whether the parties intended to profit from the business during the operation of the business as a partnership, but whether the parties intended to profit from that particular business.