The taxpayer redeemed U.S.-dollar denominated preferred shares at a time that the U.S. dollar had appreciated relative to the exchange rate at the time of issuance. The taxpayer was found to have realized a loss under s. 39(2) notwithstanding that s. 84(3) simultaneously operated to deem it to have paid a dividend to the shareholders. Strayer JA stated (at para. 8):
According to the common understanding of "loss", the respondent's payment to the shareholders clearly qualifies. That is, in Canadian dollar terms the respondent paid more to redeem the shares than it had initially received.