1996 Corporate Management Tax Conference Round Table, Q. 13 (C.T.O. "Benefit of Conversion")

Although s. 51(2) does not contain an exclusion for wholly-owned corporations, ordinarily RC would not consider that it is reasonable to regard any difference between the fair market value of preferred shares of a wholly-owned subsidiary and the fair market value of common shares of the subsidiary for which they are exchanged as a benefit that the parent corporation desired to confer on the subsidiary.

Although s. 86(2) does not contain an exclusion for wholly-owned corporations, ordinarily RC would not consider that it is reasonable to regard any difference between the fair market value of preferred shares of a wholly-owned subsidiary and the fair market value of common shares of the subsidiary for which they are exchanged as a benefit that the parent corporation desired to confer on the subsidiary.