CRA loss-shifting ruling contemplates a limited-recourse loan to Profitco

A triangular intercorporate loss-shifting transaction (under which Profitco borrows on an interest-bearing basis from Lossco, subscribes for pref of a Newco subsidiary of Lossco, and Newco lends the money back on a non-interest-bearing basis to Lossco) contemplates that the only recourse under the loan of Lossco to Profitco will be to the pref of Newco, and that Profitco may satisfy the loan to it by delivering the Newco pref (irrespective of their value).

Neal Armstrong.  Summary of 2012 Ruling 2012-0439191R3 under s. 111(1)(a).