CRA indicates that the flipped property rule may not apply where a beneficiary receives the devise of a house of a deceased parent and promptly sells it

Although s. 13(12) deems the gain of a taxpayer from the disposition of a housing unit within 365 days of its acquisition to be an inventory gain, s. 12(13)(b)(i) provides an exception for a disposition which inter alia can reasonably be considered to occur due to the death of a person related to the taxpayer. CRA seemed to accept that this exception might be available, depending on the circumstances, where an estate distributed a housing unit of the deceased to a child beneficiary and such child then sold the unit within 365 days of the distribution.

Neal Armstrong. Summary of 29 January 2024 External T.I. 2023-0990101E5 under s. 12(13)(b)(i).