Teskey
T.C.J.
(orally):
These
three
appeals
were
all
heard
on
common
evidence.
Each
appellant
herein
elected
the
Informal
Procedure
in
their
Notice
of
Appeal
wherein
each
appellant
appealed
their
denial
of
an
allowable
business
investment
loss
for
the
year
1995.
The
facts
and
position
of
the
three
taxpayers
are
identical
except
that
Jake
M.
Striefel
(Jake)
never
went
back
to
work
for
the
company
and
resigned
as
an
employee.
Issue
The
sole
issue
is
whether
the
appellants
are
entitled
to
an
allowable
business
investment
loss
in
the
year
1995.
Facts
On
July
13th,
1989,
pursuant
to
the
Canada
Business
Corporations
Act,
West
Coast
Plywood
Company
Ltd.
(Plywood)
was
incorporated.
On
October
3rd,
1989,
Plywood
registered
an
Employee
Share
Ownership
Plan
which
met
the
eligibility
requirements
of
the
British
Columbia
Employee
Investment
Act
of
1989.
Plywood
then
proceeded
to
purchase
from
Wellwood
of
Canada
Ltd.
a
plywood
manufacturing
facility
known
as
the
Kent
Avenue
Plywood
Mill
(Kent
Mill).
Plywood
was
wholly
owned
by
its
employees
and
a
shareholder
agreement
was
entered
into
also
known
as
an
Employee
Share
Ownership
Plan
(ESOP).
All
employees
of
Plywood
had
to
purchase
a
share
of
Plywood
and
pay
cash
for
the
shares.
Each
appellant
applied
for
and
purchased
a
share
of
Plywood,
in
essence
each
employee
had
to
buy
their
job,
but
without
their
cash
injection
there
would
have
been
no
business
and
the
plant
would
have
closed.
Also
each
shareholder
received
an
annual
tax
credit
for
their
investment.
The
ESOP
provided
the
comprehensive
rules
governing
Plywood.
The
pertinent
provisions
to
these
appeals
are:
Provision
1.1
restricts
the
transfer
of
the
shares.
It
reads:
No
shares
in
the
capital
of
the
Company
or
any
beneficial
interest
therein
shall
be
sold,
transferred,
assigned,
encumbered,
pledged
or
bequeathed
except
as
permitted
or
required
under
the
Agreement.
1.4,
it
reads
under
the
heading
“Mandatory
Sale”:
Subject
to
the
provisions
of
this
Agreement
dealing
with
disability
and
layoffs
relating
to
holders
of
Class
‘A’
Common
Shares,
a
Shareholder
shall
be
deemed
to
have
irrevocably
elected
to
sell
all
shares
owned
by
the
Shareholder
in
the
capital
of
the
Company
on
the
occurrence
of
any
of
the
following
events:
(a)
Death
of
the
Shareholder;
(b)
On
retirement
or
disability
of
the
Shareholder;
(c)
On
termination
of
the
Shareholder’s
employment
by
the
Company;
(d)
On
termination
of
employment
with
the
Company
by
the
Shareholder;
or
(e)
Voluntary
act
of
the
Shareholder.
1.8
deals
with
how
Plywood
will
process
sales
as
a
result
of
one
of
the
events
in
paragraph
1.4.
It
reads:
Upon
issuance
or
receipt
by
the
Company
or
the
Shareholder
as
the
case
may
be,
of
written
notice
of
the
deemed
election
to
sell
under
paragraph
1.4,
the
Company
will
proceed
to
attempt
to
arrange
a
sale
of
the
share
or
shares
subject
to
the
deemed
election
provided
for
in
paragraph
1.4.
1.9
describes
who
may
purchase
shares
in
Plywood.
It
reads:
Eligible
purchasers
of
Class
‘A’
Common
Shares
shall
be
restricted
to
hourly
plant
employees.
Eligible
purchasers
of
Class
‘B’
Common
Shares
shall
be
restricted
to
management
employees
as
determined
from
time
to
time
by
the
Company.
1.10
under
the
heading
“Exception”
for
determining
eligible
purchasers
reads:
The
Board
will
have
the
discretion
from
time
to
time
to
waive
the
restriction
contained
in
paragraph
1.9.
For
example,
the
Board
has
determined
it
will
issue
one
(1)
Class
‘A’
share
to
the
IWA
Local
1-217
in
view
of
the
fact
that,
at
the
date
of
this
Agreement
the
IWA
was
the
collective
bargaining
agent
of
the
hourly
plant
employees.
2.3
gives
an
employee
the
right
to
characterize
a
four-month
continuous
layoff
as
a
termination
of
employment
for
the
purpose
of
resale
of
his
or
her
share.
It
reads:
In
the
event
an
employee
is
laid
off,
and
such
layoff
continues,
uninterrupted,
for
four
(4)
months,
such
employee
may
elect
to
have
the
layoff
characterized
as
a
termination
for
the
purpose
of
the
resale
of
his
share.
2.4
deals
with
the
requirement
of
Plywood
to
purchase
a
laid-off
employee’s
share
if
Plywood
has
not
arranged
a
sale
thereof
within
six
months
of
the
deemed
election.
It
reads:
In
the
event
the
Company
is
unable
to
arrange
a
sale
of
the
share
of
a
Class
‘A’
Shareholder
within
six
months
of
a
deemed
election
to
sell
pursuant
to
paragraph
1.4,
the
Shareholder
may
elect
to
require
the
Company
or
the
Company’s
nominee
as
the
Company
may
elect,
to
purchase
and/or
redeem
his
share.
2.8
provides
a
limitation
on
Plywood’s
obligation
to
purchase
or
redeem
shares.
It
reads:
No
purchase
or
redemption
by
the
Company
will
be
made,
if,
in
any
fiscal
year,
any
of
the
following
conditions
are
not
met:
(a)
The
redemption
or
purchase
must
not
reduce
Shareholder’s
equity
below
$4,500,000.00;
(b)
The
redemption
or
purchase
must
not
reduce
working
capital
(current
assets
less
current
liabilities)
below
$1,000,000.00
in
the
first
fiscal
year
of
the
Company
and
$1,250,000.00
in
any
subsequent
fiscal
year;
and
(c)
The
number
of
redemptions
and/or
purchases
which
will
be
processed
in
any
year
pursuant
to
paragraph
2.4
represents
no
more
than
2%
of
the
outstanding
Class
‘A’
shares.
6.1
provides
that
a
75%
majority
vote
is
required
to
amend
ESOP.
It
reads:
Subject
to
express
provision
to
the
contrary
being
made
in
this
Agreement
with
respect
to
any
paragraph,
the
provisions
of
this
Agreement
may
be
amended
from
time
to
time
and
the
Company
consents
to
all
amendments
which
are
evidenced
by
a
resolution
of
the
Board
of
Directors
of
the
Company
for
the
time
being,
together
with
approval
by
resolutions
of
the
Class
‘A’
and
Class
‘B’
Shareholders
of
the
Company
holding
in
the
aggregate
at
least
75%
of
the
issued
and
outstanding
shares
of
each
class
attending
and
voting
in
favour
of
the
resolution
and
at
a
general
meeting
called
for
that
purpose.
7.1
provides
that
if
an
offer
is
made
to
purchase
not
less
than
90%
of
the
issued
and
outstanding
shares,
and
75%
of
the
shareholders
agreed
to
accept
the
offer,
all
shareholders
will
be
obliged
to
sell
their
shares.
It
reads:
In
the
event
an
offer
is
received
to
purchase
not
less
than
90%
of
the
issued
and
outstanding
common
shares
in
the
capital
of
the
company,
and
in
the
event
that
Shareholders
holding
not
less
than
75%
of
each
class
of
common
shares
of
the
Company
vote
in
favour
of
the
sale,
all
parties
hereto
will
be
obligated
to
sell
their
shares
in
accordance
with
the
offer
to
purchase
and
agree
to
do
and
execute
all
things
and
documents
necessary
or
desirable
to
give
effect
to
that
transaction.
The
ESOP
was
properly
amended
on
October
3rd,
1989
to
comply
with
the
B.C.
Employee
Investment
Act
1989,
Plywood
laid
off
all
its
production
workers
in
September
of
1992,
except
for
five
persons
who
then
acted
as
security
personnel.
All
production
personnel
were
laid
off
and
all
production
ceased.
During
the
months
of
October,
1,
The
share
was
worthless.
On
December
31st,
1992,
any
reasonable
person
would
have
realized
that
Plywood
could
not
commence
the
manufacture
of
plywood
and/or
veneer
and
would
be
dissolved
or
wound
up
unless
there
was
a
restructuring
with
a
substantial
injection
of
new
capital
into
Plywood.
By
March
of
1993,
Jake
had
found
a
better
job
and
had
decided
that
no
matter
what
he
would
never
return
to
Plywood.
He
informed
Plywood
of
this
verbally
in
March
of
1993
and
confirmed
this
in
writing
on
June
14th,
1993.
On
August
19th,
1992,
there
were
nine
directors
of
Plywood.
On
August
21st,
1992,
seven
of
the
nine
directors
resigned
leaving
only
Anthony
Brown
and
Larry
Bridal.
Anthony
Brown
resigned
as
a
director
on
September
1
1th,
1992,
leaving
Larry
Bridal
as
the
sole
director
with
eight
vacancies
on
the
board.
On
March
5th,
1993,
No.
301
Sail
View
Ventures
Ltd.
(Sail)
made
a
written
offer
to
purchase
all
issued
shares
of
Plywood
for
the
aggregate
amount
of
$2
million.
On
March
6th,
1993,
Plywood
and
Sail
entered
into
a
share
purchase
agreement
where
Sail
would
purchase
treasury
shares
which
Plywood
agreed
to
issue
from
the
treasury
for
a
consideration
of
$2
million.
Jake
accepted
the
sale
offer
on
March
28th,
1993
and
executed
a
power
of
attorney
for
the
purposes
of
completing
the
proposed
conditional
sale.
The
Sail
employee
share
purchase
agreement
was
never
completed
as
the
required
75%
majority
was
not
obtained
and
Jake’s
share
was
eventually
returned
to
him.
All
three
appellants
held
their
shares
in
Plywood
up
to
July
of
1995
when
Plywood
filed
for
bankruptcy.
The
two
purchases
by
Sail
of
stock
of
Plywood
was
completed
on
June
4th,
1993
thereby
gaining
58%
ownership
of
Plywood.
On
this
date
Larry
Bridal
in
his
capacity
as
the
sole
director
filled
three
of
the
vacancies
on
the
board
of
directors
of
Plywood
pursuant
to
the
Bylaws
of
Plywood
and
he
then
resigned
as
a
director.
The
new
directors
were
Richard
W.
Warke,
Kevin
Cunningham
and
Allyson
Nelson.
Shortly
after
June
4th,
1992,
West
Coast
Forest
Products
Ltd.
(Products),
a
public
corporation
as
defined
by
subsection
89(1)
of
the
Income
Tax
Act
(The
Act)
acquired
100%
ownership
of
Sail.
Thus
Plywood
became
a
subsidiary
of
a
public
corporation.
The
new
board
of
directors
on
August
6th,
1993
called
an
annual
meeting
of
shareholders
for
August
29th,
1993,
one
of
the
items
on
the
agenda
being
the
election
of
directors.
Immediately
a
number
of
employees
commenced
a
petition
in
the
Supreme
Court
of
British
Columbia
to
prevent
any
amendment
to
the
Articles
of
Incorporation,
the
By-laws
and
the
terms
of
the
ESOP.
The
action
went
nowhere
when
the
solicitor
for
Plywood
on
September
24th,
1993
advised
the
B.C.
Ministry
of
Economic
Development
that
Plywood
would
not
be
proceeding
with
any
amendments
to
ESOP.
The
petition
did
not
challenge
the
validity
of
the
share
purchase
by
Sail.
At
no
time
did
anyone
including
any
department
of
the
British
Columbia
Government
object
to
the
share
sale
to
Sail.
Ron
Wickstrom,
the
Ministerial
Assistant
to
the
Honourable
Glen
Clark
sent
on
March
12th,
1993
a
memorandum
to
the
management
and
shareholders
of
Plywood
which
reads:
The
Provincial
Government
has
been
working
with
the
Management
and
the
Union
at
West
Coast
Plywood
to
assist
in
obtaining
a
private
sector
partner
for
the
company.
During
this
lengthy
process
the
Provincial
Government
has
gained
the
forbearance
of
the
Bank
of
Nova
Scotia
in
collecting
money
owing
to
the
Bank,
and
indeed
has
been
financially
supporting
West
Coast
Plywood
Ltd.
At
this
time
and
indeed
throughout
this
process
no
offer
other
than
the
offer
currently
before
the
shareholders
has
been
presented.
Provincial
Officials
are
prepared
to
recommend
to
Cabinet
the
terms
that
301
Sail
View
is
presenting
and
believe
that
this
offer
represents
the
only
chance
to
avoid
liquidation
of
West
Coast
Plywood.
Should
this
offer
be
rejected
by
the
shareholders,
Provincial
intercession
with
the
Bank
of
Nova
Scotia
will
not
continue
and
liquidation
of
the
company
would
be
the
result
as
the
bank
would
surely
call
its
loan
forthwith.
I
trust
this
makes
clear
the
position
of
the
Province
of
British
Columbia
in
this
matter.
I
accept
the
facts
set
forth
therein
as
true
and
correct.
Appellants
Position
Jake
has
put
forth
the
argument
that
since
he
ceased
to
be
an
employee
in
March
of
1993,
that
he
lost
the
right
to
own
a
share
of
Plywood
and
Plywood
was
obligated
to
take
over
his
shares
and,
therefore,
he
was
no
longer
a
shareholder
when
Plywood
became
a
subsidiary
of
a
public
company.
All
three
appellants
argued
that
the
treasury
share
sale
to
Sail
was
invalid
as
the
shareholders
had
not
elected
a
board
of
directors
and
thus
Plywood
was
still
a
private
small
business
corporation
at
the
time
of
the
bankruptcy,
and
that
in
any
event
no
money
was
paid
for
the
shares
issued
to
Sail
and,
therefore,
Sail
was
not
the
owner
thereof
of
the
issued
shares.
Analysis
The
agent
for
the
appellants
did
not
understand
that
by
the
provisions
of
the
Act,
assessments
of
tax
thereunder
are
deemed
valid
and,
therefore,
the
onus
rests
with
taxpayers
to
demonstrate
that
the
assessment
is
in
error.
She
did
not
realize
that
the
facts
assumed
by
the
Minister
of
National
Revenue
(the
Minister)
are
“presumed
true”.
Obviously
the
way
to
win
a
tax
case
is
by
producing
evidence
that
destroys
the
factual
background
assumed
by
the
Minister
or
by
demonstrating
that
the
Minister
is
misinterpreting
the
particular
provision
of
the
Act
that
is
the
basis
of
the
assessment.
Dealing
with
the
first
position
of
Jake
which
deals
only
with
him,
I
must
say
I
found
him
to
be
a
retired,
honest,
hard-working
millwright.
However,
where
in
his
testimony
varies
from
the
written
documentation,
I
accept
the
documents.
This
in
no
way
impugns
Jake’s
character
and
I
simply
believe
that
he
never
fully
understood
the
actual
facts.
All
the
shares
when
issued
by
Plywood
to
its
employees
had
to
be
held
in
escrow
by
Royal
Trust
for
a
fixed
period.
Jake
received
from
Royal
Trust
a
letter
dated
June
21st,
1990,
confirming
his
purchase
of
a
single
shares,
and
that
that
share
certificate
No.
198
was
being
held
in
escrow
and
that
Plywood
each
year
would
process
his
employee
investment
tax
credit
of
$2,000.00,
and
that
the
escrow
termination
date
was
January
19th,
1993.
The
last
paragraph
of
this
letter
warns
Jake
that
the
acquisition
and
disposition
of
his
share
is
subject
to
the
Employee
Investment
Act
and
that
disposition
of
the
share
prior
to
the
expiration
of
the
escrow
period,
he
would
have
to
pay
the
B.C.
Government
the
value
of
the
used
tax
credit.
On
January
22nd,
1993,
Royal
Trust
sent
to
Jake
a
photocopy
of
his
share
certificate
and
advised
that
the
escrow
period
was
over
and
the
certificate
was
released.
It
advised
him
that
the
certificate
was
sent
to
Plywood’s
corporate
records
office
for
safekeeping,
but
if
he
wished
to
hold
the
original
share
and
arrange
for
his
own
safekeeping,
to
contact
Plywood
and
they
would
make
every
effort
to
deliver
it
to
him
within
three
working
days.
On
March
28th,
Jake
executed
two
documents,
namely
1)
an
acceptance
of
the
Sail
offer
to
purchase
his
share,
and
2)
a
proxy
giving
officers
of
Plywood
the
voting
rights
to
his
share
for
the
purpose
of
the
proposed
Sail
purchase.
Since
the
Sail
purchase
of
employee-held
stock
failed
as
the
required
75%
majority
was
not
obtained,
the
ownership
of
the
share
remained
with
Jake.
Signing
the
proxy
and
the
acceptance
of
the
Sail
offer
were
acts
of
ownership
which
Jake
cannot
now
deny.
Plywood’s
special
general
meeting
to
approve
the
two
purchases
by
Sail
was
held
on
March
28th.
The
employees’
sale
of
their
shares
to
Sail
only
received
70%
of
the
votes
and
not
the
required
75%.
Thus
on
that
date
Jake
knew
or
ought
to
know
that
he
was
still
the
owner
of
his
one
share
of
Plywood.
Jake
took
no
positive
steps
to
invoke
the
provisions
of
the
ESOP,
and
even
if
he
had
evoked
provision
1.4,
mandatory
sale,
immediately
after
the
March
28th
vote,
Plywood
had
six
months
to
arrange
a
sale
of
the
share
and
prior
to
the
expiration
of
that
period,
Plywood
became
a
subsidiary
of
a
public
corporation,
also
pursuant
to
ESOP
Article
2.8,
relieved
Plywood
of
any
obligation
to
purchase
or
redeem
Jake’s
share
as
Plywood
was
insolvent.
Thus
Jake
is
in
the
same
position
as
the
other
two
appellants.
They
all
owned
their
shares
in
1995
when
Plywood
declared
bankruptcy.
The
appellant
argues
that
the
appointment
of
Richard
W.
Warke,
Kevin
Carlton
Cunningham
and
Allyson
Nelson
was
invalid
as
it
was
not
done
by
the
shareholders
at
a
meeting
of
shareholders
duly
called
with
proper
notice.
As
stated
previously
Plywood’s
By-laws
empowered
the
directors
to
fill
vacancies
on
the
board
from
time
to
time.
Vacancies
had
occurred
due
to
resignations
and
it
was
within
director
Bridal’s
power
to
appoint
the
above
three
people
as
directors.
The
appellants
do
not
challenge
the
sole
directorship
of
Bridal,
who
on
June
4th
determined
that
it
was
in
the
best
interest
of
Plywood
to
waive
the
restriction
limiting
acquisition
shares
to
Plywood
employees
and
then
proceeded
to
accept
the
Sail
subscription
for
shares.
Later
that
same
day
the
new
board
accepted
a
further
subscription
for
more
shares
from
Sail
and
they
made
the
same
determination
that
Bridal
did,
that
the
new
subscription
was
also
accepted.
Thus
I
find
that
the
new
board
of
directors
were
properly
appointed
and
legally
held
office
and
the
sale
transaction
of
shares
by
Plywood
to
Sail
were
properly
effected.
The
appellant
raises
the
issue
and
argument
that
no
consideration
was
ever
paid
by
Sail
for
these
shares.
This
is
rejected
outright
for
the
following
reasons.
1)
Plywood
could
never
have
recommenced
business
without
receiving
the
money
that
was
so
necessary.
This
is
supported
by
the
testimony
of
witnesses
and
Ron
Wickstrom’s
memorandum
dated
March
22nd,
1993.
Also
no
one
including
the
Government
of
B.C.
have
attempted
to
challenge
the
share
transaction.
It
is
obvious
without
the
money
being
injected,
the
doors
of
Plywood
would
never
had
reopened
and
the
machinery
started
up.
Also
the
accounting
firm
of
KPMG
Peat
Marwick
Thorne,
a
well-known
international
firm
of
Chartered
Accountants,
did
an
auditor’s
report
of
Products
for
the
period
March
1st,
1993
to
December
31st,
1993.
They
only
audited
the
consolidated
balance
sheet
of
Products.
Note
3
thereof
under
the
heading
“Business
Acquisitions”
shows
consideration
paid
including
acquisitions
costs,
$2,875,193.00,
the
$2,800,000.00
being
obviously
Sail’s
obligation
under
the
agreement.
Since
there
is
no
evidence
before
me
that
$2,800,000.00
was
not
paid
and
the
company
did
reopen
and
rehire,
I
am
satisfied
that
the
shares
were
properly
issued
to
Sail
for
valid
consideration
of
$2,800,000.00.
Even
if
there
had
been
some
small
technical
irregularity
in
the
share
sale,
Section
55(2)
of
the
Canada
Business
Corporations
Act
would
cure
the
irregularity.
The
provision
under
the
heading
“Purchaser
for
value”
reads:
A
security
is
valid
in
the
hands
of
a
purchaser
for
value
without
notice
of
any
defect
going
to
its
validity.
There
has
been
no
evidence
before
me
that
any
notice
was
given
to
the
purchaser
of
any
technical
problem.
No
one
before
or
after
the
sale
by
Plywood
to
Sail
of
treasury
shares
challenged
the
sale.
In
fact,
82%
of
the
shareholders
approved
the
sale.
The
sale
of
these
treasury
shares
and
the
resulting
injection
of
equity
capital
was
the
only
possible
solution
by
Plywood
and
was
necessary
for
it
to
recommence
operations
and
rehire
the
laid-off
employees.
The
Minister
made
assumptions
of
fact
when
making
his
assessments
disallowing
the
ABILs
of
each
appellant
for
the
year
1995,
all
of
which
are
true
and
bear
repeating.
Only
paragraph
(a)
varies
between
the
appellants
and
I
will
only
quote
those
in
reply
to
Jake’s
Notice
of
Appeal.
a)
on
19
January
1990
the
Appellant
purchased
one
Class
A
share
of
his
employer,
Plywood,
for
$13,000;
b)
at
the
time
the
Appellant
purchased
his
share
of
Plywood
on
19
January
1990
Plywood
was
a
Canadian
controlled
private
corporation
as
defined
by
subsection
125(7)
of
the
Income
Tax
Act:
c)
on
26
September
1992
Plywood
suspended
operations
due
to
financial
difficulties;
d)
in
1993
Sail
View
Ventures
Ltd
...
made
an
offer
to
purchase
the
shares
of
Plywood
which
offer
was
conditional
on
its
acceptance
by
90%
of
the
shareholders
of
Plywood:
e)
on
28
March
1993
at
a
meeting
of
Plywood’s
shareholders
82%
of
the
shareholders,
including
the
Appellant,
accepted
the
offer
referred
to
in
paragraph
d)
herein:
f)
since
less
than
90%
of
the
shareholders
of
Plywood
accepted
Sail
View’s
offer,
the
offer
was
withdrawn.
g)
on
4
June
1993
Sail
View
purchased
treasury
shares
of
Plywood
thereby
gaining
58%
ownership
of
Plywood;
h)
shortly
after
4
June
1993
West
Coast
Forest
Products
Ltd
...
acquired
100%
ownership
of
Sail
View:
i)
Sail
View
was,
up
to
its
acquisition
by
Products
a
Canadian
controlled
private
corporation
as
defined
by
subsection
125(7)
of
the
Act:
j)
Products
was
at
all
relevant
times
a
public
corporation
as
defined
by
subsection
89(1)
of
the
Act;
k)
as
a
result
of
the
acquisition
of
Sail
View
by
Products
Plywood
became
a
subsidiary
of
a
public
corporation
and
therefore
cease
to
be
a
private
corporation
as
defined
by
subsection
89(1)
of
the
Act
and
ceased
to
be
a
Canadian
controlled
private
corporation
as
defined
by
subsection
125(7)
of
the
Act
and
ceased
to
be
a
small
business
corporation
as
defined
by
subsection
248(1)
of
the
Act:
l)
in
February
1995
Plywood
again
suspended
operations
and
on
27
July
1995
filed
for
bankruptcy;
and
m)
at
all
relevant
times
and
up
until
the
date
of
the
bankruptcy
in
1995
the
Appellant
owned
his
share
of
Plywood.
For
these
reasons,
all
three
appeals
are
dismissed.
I
feel
though
that
I
would
be
remiss
if
I
did
not
comment
on
Section
50
of
the
Act.
Under
the
heading
“Debts
established
to
be
bad
debts
and
shares
of
bankrupt
corporation”.
Section
50
reads:
(1)
For
the
purposes
of
this
subdivision,
where...
And
I
do
not
quote
from
(a),
but
I
quote
from
(b)
and
the
remainder
of
the
Section:
(b)
a
share
(other
than
a
share
received
by
a
taxpayer
as
consideration
in
respect
to
the
disposition
of
personal
property)
of
the
capital
stock
of
a
corporation
is
owned
by
the
taxpayer
at
the
end
of
a
taxation
year
and...
And
I
will
not
quote
subparagraph
(i)
or
subparagraph
(ii)
and
quote
from
(iii)
at
the
end
of
the
year,
(A)
the
corporation
is
insolvent,
(B)
neither
the
corporation
nor
a
corporation
controlled
by
it
carries
on
business,
(C)
the
fair
market
value
of
the
share
is
nil,
and
(D)
it
is
reasonable
to
expect
that
the
corporation
will
be
dissolved
or
wound
up
and
will
not
commence
to
carry
on
business
and
the
taxpayer
elects
in
the
taxpayer’s
return
of
income
for
the
year
to
have
this
subsection
apply
in
respect
of
the
debt
or
the
share
as
the
case
may
be,
the
taxpayer
shall
be
deemed
to
have
disposed
of
the
debt
or
the
share
as
the
case
may
be
at
the
end
of
the
year
for
proceeds
equal
to
nil
and
to
have
reacquired
it
immediately
thereafter
at
the
end
of
the
year
at
a
cost
equal
to
nil.
Having
found
herein
that
the
provisions
of
(iii),
namely
(A),
(B),
(C)
and
(D),
have
all
been
met,
I
conclude
that
if
these
taxpayers
had
made
the
election
referred
to
above
in
their
1992
TI
tax
returns
and
the
issue
had
come
before
me,
and
based
on
the
evidence
I
heard
at
this
hearing
and
the
documents
filed,
I
would
have
found
that
each
appellant
had
a
valid
allowable
business
investment
loss
in
the
year
1992.
Appeals
dismissed.
Email this Content