2015 Ruling 2015-0569891R3 - Ss. 164(6) carry-back and post-mortem pipeline -- summary under Subsection 164(6)

One of the beneficiaries (“Child 2”), of a Canadian estate holding stepped-up (per s. 70(5)) shares of A Co (a Canadian portfolio investment company) was a U.S. resident. A Co redeems a portion of its shares held by the estate, thereby giving rise to a deemed dividend and to a capital loss which can be carried back under s. 164(6) to partially offset some of the terminal year capital gain on the A Co shares, and such redemption proceeds are allocated and paid (less Part XIII withholding) by the estate to Child 2 through the issuance of a promissory note. The estate then engages in a conventional pipeline transaction for the benefit of its resident beneficiaries. Rulings on ss. 84(2), 84.1 and 245(2), but not 164(6) - but the summary indicates that the principal issue is "whether estate can elect under subsection 164(6) where there is a non-resident beneficiary."