Principal Issues:
1.XXXXXXXXXX deal which is somewhat similar to one previously issued for it (XXXXXXXXXX). The main issue in this file was whether the draft limited-recourse debt rules in 143.2 would impact this ruling? The initial proposal had an option whereunder the limited partners could sell their units to XXXXXXXXXX for a preset amount (this amount was equal to each partner's debt outstanding at that time). We were concerned that this option should be caught by the limited-recourse rules, but because the option was caught by 96(2.2), draft 143.2 would not apply.
2.Would the Interest Facility circumvent 96(2.2(c) and 143.2(7) and would borrowings thereunder cause a 143.2(6) grind in cost of the Partnership Units?
Position:
1.Due to our concerns, and in order to expedite the ruling, the taxpayer revised their proposal, dropping the option arrangement from their proposed transactions. Numerous other amendments were made to the initial proposal in order to arrive at an arrangement we could provide rulings on which were satisfactory to the taxpayer.
We added a series of opinions at the end of the ruling concerning scenarios when the limited-recourse debt rules would or would not apply.
2.Possible problem re: 96(2.2)(c) and 143.2(7) - probable 143.2(6) grind - possible application of GAAR.
Reasons:
