The Queen v. Leslie, 75 DTC 5086, [1975] CTC 155 (FCTD)

In 1959 the taxpayer sold his food storage business having a fair market value of $5,078 to a company of which he was the majority shareholder in consideration of treasury shares having an expressed value of $10,000 and a promissory note in the principal amount of $15,300. No payments were made on the promissory note until 1969. Since the company at the time of issuance of the promissory note did not have "sufficient assets to create a good or sound expectation of the debt actually being paid" no benefit was conferred until the time of payment.

On the incorporation of a business the agreement purported to transfer net assets having a value of $5,078 and goodwill having a value of $20,222 in consideration of the issuance of $10,000 of treasury shares and a promissory note in the principal amount of $15,300. In fact, the business had no goodwill. It was held that there was some consideration for the promissory note since the promissory note was not expressed in the agreement to be given for any part of the goodwill but merely for part of the balance of the purchase price of all the assets sold.