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14 March 2003 Internal T.I. 2003-0182977 F - 40(3.5)(c) -- summary under Paragraph 40(3.5)(c)

Where a public corporation ("Parentco") holding shares of a public corporation ("Subco") with an accrued loss, sells the shares to a newly-incorporated subsidiary ("Newco") and Subco and Newco then merge within 30 days on a triangular amalgamation so that the minority shareholders of Subco become shareholders of Parentco, the capital loss otherwise realized by Parentco on the transfer of the shares will be denied by s. 40(3.4).

7 October 2011 Roundtable, 2011-0412121C6 F - Interaction between S. 84.1 and S. 85(2.1) -- summary under Subsection 85(2.1)

Mr. A transferred his shares of Opco with an ACB and PUC of $100 and $100,000, respectively, to Holdco on a s. 85(1) rollover basis in consideration for Holdco common shares with the same ACB and PUC. S. 84.1(1) did not apply to grind the PUC of such Holdco common shares given the high PUC of the transferred common shares. However, does s. 85(2.1) instead apply to grind such PUC?

By services, 28 November, 2015

Canada v. Cascades Inc., 2009 DTC 6122, 2009 FCA 135 -- summary under Paragraph 40(3.5)(c)

The trial judge had found that the stop-loss rule in s. 40(3.4) did not apply to the disposition by the taxpayer of shares of a subsidiary ("PII") at a loss to another newly-incorporated subsidiary because within 30 days of that disposition, the two subsidiaries were amalgamated - on the basis that the presumption in s. 40(3.5)(c) only applied if subsections 40(3.3) and (3.4) had already been applied, whereas here not all the conditions of s.

By services, 28 November, 2015

Collins & Aikman Products Co. v. The Queen, 2009 DTC 1179 [at at 958], 2009 TCC 299, aff'd 2010 DTC 5164 [at 7293], 2010 FCA 251 -- summary under Subsection 245(4)

The taxpayer ("Products"), which was a corporation resident in the U.S., transferred the shares of its subsidiary ("CAHL"), which was non-resident in Canada notwithstanding that it had been incorporated in Canada in 1929, to a newly incorporated Canadian-subsidiary of Products ("Holdings") in consideration for a common share of Holdings that had a paid-up capital equal to the fair market value of CAHL.

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