Since the taxpayer was held to be dealing at arm's length with a corporation ("Clarebeau") 1/2 of whose shares were owned by the taxpayer's family holding company and 1/2 of whose shares were owned by the family holding company of his business associate ("Claridge"), a sale by the taxpayer of share purchase options to Clarebeau for nominal consideration was governed by s. 7(1)(b) rather than s. 7(1)(c). In contrast with Windsor Plastic Products, "Clarebeau was not the gain-producing enterprise but was merely the vehicle of expression of the plaintiff's partnership with Mr. Claridge." Neither partner could exert control over the other respecting the distribution of Clarebeau's gains, as such distribution was predetermined by their agreement to share equally. The plaintiff and Claridge believed that they (with their respective wives) enjoyed precisely equal control of Clarebeau (although, as they discovered much later, Claridge as president had the right to cast deciding votes at meetings), they had equal rights to the assets and earnings of Clarebeau, and the share options represented a business opportunity that the plaintiff felt himself obliged to pool with Claridge through the medium of Clarebeau.