There is an automatic cost bump on the sale of corporate property at an undervalue to a controlling shareholder?

Although s. 69(1)(b)(i) is widely viewed as producing a one-sided adjustment (i.e., no increase in cost to the non-arm’s length purchaser to match the increased proceeds to the vendor), this effectively is not the case where an estate sells trust property to a beneficiary at an under-value (apparently without a price adjustment clause), as the resulting taxable benefit will increase the beneficiary’s cost under s. 52(1).  Although not mentioned by CRA, the same logic appears to apply on a sale of corporate property to a non-arm's length shareholder.

This still is a bad result, as the under-valuation amount is taxable immediately on income account.

Neal Armstrong.  Summary of 6 August 2013 T.I. 2012-0469481E5 F under s. 52(1).