Macmillan Bloedel Ltd. v. R., 99 DTC 5454, [1999] 3 CTC 652 (FCA) -- summary under Subsection 84(3)

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.