Mollinaro v. The Queen, 2000 DTC 6114 (FCA)

Pursuant to an agreement in which the taxpayer's holding company agreed to sell all the shares of a pizza manufacturing company ("Pizza Crust") to a corporate purchaser ("Catelli"), Catelli agreed to enter into an employment agreement with the taxpayer where he would be paid approximately $1.8 million over three years, of which he would be entitled to receive $1.5 million even if he died or was terminated for good reason.

Sexton J.A. rejected a submission of the taxpayer that the payment of $1.5 million was in substance proceeds of disposition of his capital interest in Pizza Crust. First, the taxpayer himself was owe no capital payment by Catelli. Second, given that the employment agreement had most of the terms of usual employment agreements and was seriously negotiated with lawyers and accountants representing the taxpayer, its substance was that of an employment agreement.

Pursuant to an agreement in which the taxpayer's holding company agreed to sell all the shares of a pizza manufacturing company ("Pizza Crust") to a corporate purchaser ("Catelli"), Catelli agreed to enter into an employment agreement with the taxpayer where he would be paid approximately $1.8 million over three years, of which he would be entitled to receive $1.5 million even if he died or was terminated for good reason.

Sexton J.A. rejected a submission of the taxpayer that the payment of $1.5 million was in substance proceeds of disposition of his capital interest in Pizza Crust. First, the taxpayer himself was owed no capital payment by Catelli. Second, given that the employment agreement had most of the terms of usual employment agreements and was seriously negotiated with lawyers and accountants representing the taxpayer, its substance was that of an employment agreement.

Pursuant to an agreement in which the taxpayer's holding company agreed to sell all the shares of a pizza manufacturing company ("Pizza Crust") to a corporate purchaser ("Catelli"), Catelli agreed to enter into an employment agreement with the taxpayer where he would be paid approximately $1.8 million over three years, of which he would be entitled to receive $1.5 million even if he died or was terminated for good reason.

Sexton J.A. rejected a submission of the taxpayer that the payment of $1.5 million was in substance proceeds of disposition of his capital interest in Pizza Crust. First, the taxpayer himself was owed no capital payment by Catelli. Second, given that the employment agreement had most of the terms of usual employment agreements and was seriously negotiated with lawyers and accountants representing the taxpayer, its substance was that of an employment agreement.