The taxpayers were participants in leveraged donation transactions, which were intended to result in a step-up of the adjusted cost base of courseware licences (e.g., on how to use Microsoft products) under ss. 69(1)(c) and 107(2) (apparently with a view to avoiding s. 248(35)) before the licences were donated by them at a higher stipulated value to a registered charity ("CCA"). In particular, a Bahamian corporation ("Phoenix") acquired various courseware licenses at a modest cost, and gifted most of them to a Canadian–resident Trust. Ostensibly, the licences then were distributed to the taxpayers as capital beneficiaries of the Trust, with the taxpayers then donating them to CCA. The participants also made cash donations to a second registered charity ("Millennium"), which redonated 80% of those amounts to CCA. The taxpayers knew that their cheques to Millennium would not be cashed until they were accepted as capital beneficiaries of the Trust and, thus, would receive the licences. The taxpayers were issued charitable receipts for three or more times their cash outlay (and perhaps 800 times the cost to Phoenix of the licences).
Pizzitelli J did not directly address the question whether the "gift" of the licences by Phoenix to the Trust stepped up the licences' cost under s. 69(1)(c), but instead found against the taxpayers on a host of other grounds. See summaries under s. 118.1 - total charitable gifts, general concepts - sham, general concepts - fair market value, s. 104(1), and s. 107(2).