Fiducie Famille Gauthier - Federal Court of Appeal finds that the fair market value of shares should not exclude recently-incurred reorganization expenses

If you purchase a company for $2.6 million, and then immediately incur $200,000 in professional fees to reorganize the company, followed by a transfer of the securities of the company in an internal reorganization, is it appropriate to consider that the securities have a fair market value of $2.8 million on the internal transfer?  The Fiducie Gauthier case - which dealt with the reverse situation where approximately $200,000 of reorganization expenses are incurred before transferring securities in a non-arm's length transfer, and then selling them in an arm's length sale for $2.8 million - arguably provides some support for the proposition that the fair market value of shares may reflect recently-incurred reorganization expenses.

Neal Armstrong.  Summaries of Fiducie Famille Gauthier v. The Queen, 2012 FCA 76, aff'g  2011 TCC 318 under s. 84.1(1) and General Concepts - Fair Market Value - Shares.