CRA rules that conversion of a Delaware corporation to an LLC was not a disposition

CRA has ruled that the conversion of a Delaware C-Corp into an LLC does not entail a disposition at the shareholder or corporate level (see also 2008-0272141R3). The ruling letter stipulated that the existing common shares were converted into LLC “shares” with similar attributes rather than into an undivided membership interest, but appears to have been unnecessary, as CRA’s reasons referred to (i) the Delaware legislation treating the LLC as a continuation of the converting corporation and (ii) the LLC being a corporation for ITA purposes.

Neal Armstrong. Summary of 2016 Ruling 2015-0615041R3 under s. 248(1) – disposition.