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7 July 2006 Income Tax Severed Letter 2006-0177341R3- Creation of an income trust-- summary under Subsection 97(2) Summary Under Tax Topics- Income Tax Act- Section 97- Subsection 97(2) rollover on transfer for exchangeable LP units Rulings that the s. 97(2) election was available for various transfers of property to a partnership in consideration for exchangeable LP units. ...

They transfer equal portions of their current equal shareholdings of Opco to Realtyco under s. 85(1) in consideration for preferred shares of equivalent fair market value. Opco transfers realty to Realtyco under s. 85(1) in consideration for preferred shares of equivalent FMV. ... CRA then stated: Furthermore, as regards the dividend deemed to be received by Opco, an increase in interest of Third Party described in subparagraph 55(3)(a)(v) would result from the transfer of the shares of Opco by Third Party to Realtyco in consideration for preferred shares in the capital of Realtyco, as well as on the redemption of the preferred shares in the capital of Realtyco held by Opco. ...

They transfer equal portions of their current equal shareholdings of Opco to Realtyco under s. 85(1) in consideration for preferred shares of equivalent fair market value. Opco transfers realty to Realtyco under s. 85(1) in consideration for preferred shares of equivalent FMV. ... CRA then stated: Furthermore, as regards the dividend deemed to be received by Opco, an increase in interest of Third Party described in subparagraph 55(3)(a)(v) would result from the transfer of the shares of Opco by Third Party to Realtyco in consideration for preferred shares in the capital of Realtyco, as well as on the redemption of the preferred shares in the capital of Realtyco held by Opco. ...

DC has no subsidiaries other than Newco, which it incorporated for nominal consideration. ... DC transferred (DC Transfer 1) the Canadian Transferred Business (which included the accounts receivable, trade receivables, inventories, prepaid expenses and business assets) to Newco in consideration for the assumption of liabilities, the issuance of a promissory note (Newco Debt) and the issuance of common shares, with a s. 85(1) election being filed. ... DC will become legally obligated to make the DC Cash Transfer and to transfer the Newco Common Shares and a loan receivable (the DC Receivable) from Newco to TCo in consideration for the assumption of a portion of the debt, owing by DC to a non-resident indirect subsidiary of Foreign Parentco, equal in amount to the DC Receivable and, respecting the transferred Newco share and DC Cash Transfer, for the assumption of liabilities and the issuance of TCo Preferred Shares. ...