177795 Canada Inc. c. La Reine, 2008 DTC 3771, 2007 TCC 569 -- summary under Section 96

The taxpayer, whose principal place of business was in Quebec and who purchased interests in a Texas partnership shortly after the sale of the partnership's asset (a small strip mall) to the bank to whom it was in default, were found not to have an intention to carry on business in common with the U.S. vendor partners notwithstanding that the partnership agreement was amended to provide for the possibility of investing in real property projects other than the foreclosed asset and, indeed, two years later the partnership finally invested U.S.$175,000 in a real property project that it still had at the time of trial. Lamarre J. indicated (at para. 8) that in the Backman case, "the Supreme Court of Canada confirmed the principle that a taxpayer seeking to deduct Canadian partnership losses under section 96 of the ITA must satisfy the definition of partnership that exists under the relevant provincial law", and indicated that in the case at bar, the Quebec civil law governed the question of whether there was a partnership.