QROC elections (where available) should be considered for pre-acq dividends received by a partnership

Pre-acquisition surplus dividends received on foreign affiliate shares held by a partnership with Canadian corporate partners do not reduce the adjusted cost base to it of those shares.  Instead, the consequences of the dividend are deferred until either those shares or the partnership interest are disposed of, with the result that the Canadian corporate partners realize a corresponding gain or increased proceeds of disposition at that time – even where such disposition otherwise would occur on a rollover basis.

This result can be avoided if any such distributions are made by the foreign affiliate as capital distributions to the partnership and are electively treated as qualifying returns of capital. However, this solution will not be available if capital distributions are not permitted or practicable in the particular foreign jurisdiction.

Neal Armstrong.  Summary of Geoffrey S. Turner, "ACB Adjustments for Foreign Affiliate Shares Held Through Partnerships", International Tax (Wolters Kluwer CCH), No. 79, December 2014, p. 1 under s. 92(5).