Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.
Dear Sirs:
This is in reply to your letter of November 29, 1990 wherein you request a technical interpretation concerning a situation where
24(1)
As indicated in Information Circular 70-6R2, we do not express opinions on specific proposed transactions other than as a reply to an advance income tax ruling. As a consequence thereof, we may only offer the following general comments.
A payment of cash to the estate to enable it to pay the liabilities will result in a contribution of property to the trust for the purpose of subparagraph 108(1)(ii) of the Act. As a result, the trust will lose its status as a "testamentary trust" under paragraph 108(1)(i) of the Act as well as its status as a "personal trust" under subsection 248(1) of the Act. Since there is no longer a personal trust, subsection 107(2.1) of the Act will deem any distribution of trust property to beneficiaries in satisfaction of the beneficiaries' interest, to occur at fair market value. There is no rollover available in these circumstances.
We trust the above comments will be of assistance to you.
Yours truly,
for DirectorFinancial Industries DivisionRulings Directorate
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© Her Majesty the Queen in Right of Canada, 1991
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© Sa Majesté la Reine du Chef du Canada, 1991
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