Chutka v. Canada, 2001 DTC 5093 (FCA) -- summary under Subparagraph 251(2)(c)(i)

A sale of equipment by a corporation to a partnership whose general partner was wholly-owned by the same individual who owned the vendor corporation was found to be a non-arm's length transaction, with the result that s. 69(1)(a) apply to reduce the capital cost of the equipment to the purchasing partnership to the equipment's fair market value. Linden J.A. found (at p. 5098) that "the fiction of a partnership as an entity separate from the partners is temporary and does not extend to colour the true legal nature of transactions at the time they are entered into by a partnership" and that both the vendor corporation and the general partner were persons and taxpayers within the meaning of the Act and were related persons, so that s.251 deemed the transaction to occur not at arm's length.