Some of the shares held by the taxpayer in its French subsidiary were purchased for cancellation by the subsidiary in consideration for the assignment to the taxpayer of a note (denominated in French-francs) owing to the subsidiary by a French partnership whose principal partner was the U.S. parent of the taxpayer. A month later, the note was converted into indebtedness denominated in Canadian dollars.
The conversion of the note to Canadian dollars did not give rise to a payment, credit or loan given that the Canadian dollar note was issued and accepted as replacement for the original note in circumstances where the terms were remained the same except the currency of payment.