The taxpayer transferred shares of a corporation ("3101") to a management company controlled by him and the management company disposed of a portion of those transferred shares to the taxpayer's wife approximately a year later. Approximately half a year after that, the taxpayer's wife exchanged her shares of 3101 for shares of another class of 3101, following which 3101 was merged with another corporation and the taxpayer's wife disposed of her shares of the merged company to a purchaser at a capital gain.
Tardif J. found that the shares of the merged company were substituted property for the shares that the taxpayer had transferred to the management company and stated (at para. 38) that "there is no basis to hold that there has to be a series of interrelated operations here".