Principal Issues: Where the shares of a foreign corporation held by a partnership with a Canadian corporation as partner are transferred pursuant to subsection 85(2) to another Canadian corporation owned by the partnership, whether the deemed gain determined under subsections 92(5) and (6) results in an adjustment to the proceeds of disposition of the shares in the partnership, the cost of the shares to the recipient corporation, or the elected amount under subsection 85(1)(a).
Position: The deemed gain would not result in an adjustment to the transferor's proceeds of disposition, the transferee's cost of the transferred shares, nor the elected amount pursuant to 85(1)(a).
Reasons: 92(5) deems the amount determined under 92(6) to be a gain of the corporate partner from the disposition of the shares by the partnership, and does not affect amounts determined under 85(1)(a).