S. 69(11) can apply to non-rollover transactions
The shareholders of X Co, which is engaged in an equipment leasing business, would like to sell their shares for $4 million, but potential purchasers are only interested in an asset purchase. The X Co shareholders instead sell their shares for $4.5 million to an arm’s length Lossco, which winds up X Co and sells the equipment to an arm’s length purchaser (Buyco) for $5 million.
Since the sale of the X Co shares is likely for an amount in excess of their fair market value, s. 69(11) should not apply to that sale. However:
If Buyco was a real estate developer and the property owned by X Co was real estate that was capital property to it but inventory to Buyco, subsection 69(11) could be an issue. The shares of X Co would be worth the full $5 million to Buyco, because Buyco could step up the cost of X Co's underlying land to the $5 million purchase price of the shares of X Co….This being the case, the shareholders of X Co, in order to effect the share sale to Lossco, will have accepted less from Lossco ($4.5 million) than they could expect Buyco to pay ($5 million).
Neal Armstrong. Summary of Perry Truster, "Loss Trading and Subsection 69(11)," Tax for the Owner-Manager, Vol. 17, No. 2, April 2017, p.4 under s. 69(11).