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10 October 2014 APFF Roundtable Q. 15, 2014-0538151C6 F- 2014 APFF Roundtable, Q. 15- Section 143.4 & Reverse Earn-out-- summary under Excluded Obligation Summary Under Tax Topics- Income Tax Act- Section 80- Subsection 80(1)- Excluded Obligation reverse earnout obligation of Buyco re Target was excluded obligation A newly formed corporation ("Newco") purchases the shares of a target corporation ("Target") for consideration that includes an earn-out clause (resulting in a debt which is subsequently forgiven). ...

X realized a capital gain of selling all of the common shares of HOLDCO to his children in consideration for promissory notes, but did not claim the capital gains deduction (“CGD”) under s. 110.6(2.1). ...

., the greatest of the FMV of the consideration given, the ACB of the policy and the CSV of the policy at the time of transfer. ...

. … [T]he transfer of the designated benefit to the surviving spouse could possibly be tax-free, provided that the surviving spouse pays an amount equal to the eligible amount [defined in s. 146.3(6.11)] as a premium under an RRSP, or a PRPP contribution, to acquire a qualifying annuity that meets certain conditions, or in consideration for an RRIF, as the case may be, within the time period provided in paragraph 60(l). ...

Given the broad nature of these provisions, where a private foundation is a beneficiary under an alter-ego trust, consideration must be given to subsections 188.1(3.3) to (3.5) for the purposes of determining the private foundation’s excess corporate holdings percentage and divestment obligation percentage for a taxation year. ...

In some instances, a note was issued by the corporation to the estate as consideration for the redemption of a portion of its shares held by the estate; and some of the proposed transactions contemplated the corporation liquidating some of its assets in order to repay this note before the Pipeline Note is repaid. ...

The designations made under subsection 104(21.2) by Trust 1 in respect of each of Trust 2 and Trust 3 must be taken into consideration in order to determine the eligible taxable capital gains of Trust 2 and Trust 3, respectively. ...

., under s. 104(24)) that it was payable for the purposes of s. 104(6), and that “[i]f the amount cannot be paid in accordance with the terms of the trust and the relevant trust law, the amount cannot be considered to have become payable for the purposes of subsections 104(6) and (13),” CRA indicated: Provided the cash received as consideration from the redemption or winding-up was paid to the capital beneficiary in accordance with the terms of trust and the applicable trust law, the deemed dividend became payable to the beneficiaries for the purposes of subsections 104(6) and 104(13) …. ...

FA1 acquires those New FA3 common shares in consideration for a $100 promissory note, and then distributes those shares to Canco as an in-kind return of capital that is excluded from the application of s. 212.3(2) by s. 212.3(18)(b)(vii). ...

Situation (b) The same considerations as for Situation (a) would be relevant. ...