Submitted by narmstrong on Tue, 01/10/2023 - 03:45
shares issued to a Canadian parent in consideration for it issuing shares on a Delaware merger had a cost equal to such shares’ FMV/ shares transferred on absorptive merger at FMV
Background
Opco, a taxable Canadian corporation and a subsidiary of another corporation, held all the shares of a non-resident subsidiary...
The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.
shares issued to a Canadian parent in consideration for it issuing shares on a Delaware merger had a cost equal to such shares’ FMV/ shares transferred on absorptive merger at FMV
shares issued to a Canadian parent in consideration for it issuing shares on a Delaware merger had a cost equal to such shares’ FMV/ shares transferred on absorptive merger at FMV
shares issued to a Canadian parent in consideration for it issuing shares on a Delaware merger had a cost equal to such shares’ FMV/ shares transferred on absorptive merger at FMV
shares issued to a Canadian parent in consideration for it issuing shares on a Delaware merger had a cost equal to such shares’ FMV/ shares transferred on absorptive merger at FMV
borrowing and payment of funds pursuant to an internal payment direction agreement
49
Principal Issues: 1. Cost of shares acquired as a result of a merger 2. Any gain realized (or loss incurred) on contributions of capital. 3. Any deemed dividend as a result of the contributions of capital. 4. Computation of ACB of shares after a contribution of capital. 5. Any income inclusion under s.9 or 12(1)(x) in respect of the contributions of capital.
Position: 1. Cost of shares includes an amount equal to the fair market value of the consideration given to acquire such shares and an amount equal to costs incurred for the purpose of acquiring such shares to the extent that such costs are not deductible in the year or any subsequent year in computing its income. 2. No. 3. No. 4. ACB increase by an amount equal to the FMV of the shares contributed as a capital contribution. 5. No.
Reasons: 1. Cost of property acquired is equal to what was given up to acquire such property. 2. ACB of shares is equal to the FMV of the shares at the time of the contributions of capital. 3. Paragraph 84(1)(b) applies. 4. Paragraph 53(1)(c). 5. This is a capital transaction and is not an amount received in the course of earning income from business or property.
services income earned from an arm’s length CCPC was ineligible under (a)(i)
239
Principal Issues: Whether certain income would be specified corporate income as defined under subsection 125(7) of the Act and whether the receipt of specified corporate income limits the small business deduction available to a corporation.
Position: Based on the facts provided, the income would likely meet the conditions set out under subparagraph (a)(i) of the definition SCI under subsection 125(7). The two corporations would be required to "share" the SBD by assignment of the business limit under 125(3.2).
116(1), 116(5), 116(5.01), 116(5.02), 116(6), 116(6.1), 150(1), 150(1.1), 150(5), 248(1), 251(2), 251(6) of the Act and Article XIII of the Canada-U.S. Tax Convention
Submitted by narmstrong on Fri, 01/06/2023 - 03:51
no obligation of non-resident estate to file a return where its gain on the sale of a condo was exempted under the principal residence exemption and it had no other income
An estate (the “Estate”) which was not resident in Canada was created on the death of a resident individual who held a Canadian condo...
The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.
disposition of capital interest arising from estate’s distribution to US beneficiary of cash derived from sale of Canadian real estate was disposition of treaty-protected property
Submitted by narmstrong on Fri, 01/06/2023 - 03:53
disposition of capital interest arising from estate’s distribution to US beneficiary of cash derived from sale of Canadian real estate was disposition of treaty-protected property
An estate (the “Estate”) which was not resident in Canada was created on the death of a resident individual who held a Canadian condo...
The text of this content is paywalled except for the first five days of each month. Subscribe or log in for unrestricted access.
no obligation of non-resident estate to file a return where its gain on the sale of a condo was exempted under the principal residence exemption and it had no other income
no obligation of non-resident estate to file a return where its gain on the sale of a condo was exempted under the principal residence exemption and it had no other income
disposition of capital interest arising from estate’s distribution to US beneficiary of cash derived from sale of Canadian real estate was disposition of treaty-protected property
316
Principal Issues: 1. Where the non-resident Estate obtained a certificate under subsection 116(2) of the Act and further disposes of “taxable Canadian property”, is there a requirement for the Estate to file a return of income pursuant to paragraph 150(1)(c) of the Act?
2. Does the distribution of cash from the non-resident Estate to the non-resident beneficiary in respect of the beneficiary’s capital interest in the Estate result in a disposition of “taxable Canadian property” as defined in subsection 248(1) of the Act?
3. If question #2 is answered by the affirmative, is the disposition of the non-resident beneficiary's capital interest in the Estate an "excluded disposition"?
4. If question #2 is answered by the affirmative, is there a requirement for the non-resident beneficiary to request a certificate pursuant to section 116 of the Act?
Position: 1. No.
2. Yes.
3. Yes.
4. No.
Reasons:
1. In the case at hand, the disposition of the Property by the Estate is an excluded disposition since all conditions in subsection 150(5) of the Act are met. Therefore, subsection 150(1.1) of the Act would apply and as a result, the Estate would not be required to file a return of income for the year.
2. Pursuant to the definition of "taxable Canadian property" in subsection 248(1) of the Act, the non-resident beneficiary's capital interest in the Estate would be considered "taxable Canadian property" pursuant to paragraph (d) of that definition, because at any particular time during the 60-month period that ends at the time of the disposition more than 50% of the fair market value of the non-resident beneficiary’s capital interest in the Estate was derived from real or immovable property situated in Canada.
3. The beneficiary's capital interest in the Estate would be considered excluded property because it qualifies as treaty-exempt property. The disposition of the non-resident beneficiary’s capital interest in the Estate would be considered an “excluded disposition” for the purposes of subsections 150(1.1) and 150(5) of the Act.
4. The non-resident beneficiary would not be required to request a certificate under section 116 of the Act because the non-resident beneficiary's capital interest in the Estate is "excluded property" under subsection 116(6) of the Act.
