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2 June 2011 STEPs Roundtable Q. 5, 2011-0401861C6- 2011 STEP- Q.5- Post-Mortem Planning and 84(2)-- summary under Subsection 84(2) Summary Under Tax Topics- Income Tax Act- Section 84- Subsection 84(2) triggers: quick distribution; mostly cash assets An estate engages in a "pipeline" strategy in which it disposes of its shares of ACo (having a stepped-up adjusted cost base under s. 70(5)) to a newly-incorporated holdco ("AHoldco") in consideration for a promissory note, and AHoldco applies an intercorporate dividend from ACo to repay the promissory note. ...

Whether a corporation's principal business is transmission, is not based solely on its revenues and net income and entails consideration of such factors as income, gross revenue, operating cost, and expenses associated with each business; the capital employed in each business; and the time and effort expended by employees in respect of each business. ...

Profit- Patents and Know-How respecting a licensing by a Canadian corporation of the use of its patent for specified purposes for a limited period to another taxable Canadian corportion in consideration for the issuance of shares, CRA was asked whether such right to use the patent would qualify as eligible property under s. 85(1.1). ...

(December 1992 Access Letter, p. 22, ¶C109-123, Tax Window, No. 17, p. 4, ¶1762)-- summary under Subsection 6205(2) Summary Under Tax Topics- Income Tax Regulations- Regulation 6205- Subsection 6205(2) Where an individual transferred the common shares of Opco to Newco in consideration for preferred shares with the intention of having Newco issue common shares to his son but instead receives the common shares himself because this transaction is frustrated, the preferred shares of Holdco will be prescribed shares on the basis that increases in the value of the property of Holdco will accrue to the common shares owned by him. ...

(November 1990 Access Letter, ¶1528)-- summary under Subsection 110.6(9) Summary Under Tax Topics- Income Tax Act- 101-110- Section 110.6- Subsection 110.6(9) Where in 1982 prior to the introduction of Part II tax, the shareholders of Opco transferred each common share of Opco to Holdco in consideration for one common share and one special share of Holdco, and no dividends ever were paid on the special shares, s. 110.6(a) will apply to deny the capital gains exemption where any significant part of any capital gain from the disposition of a share was attributable to the non-payment of dividends on the special shares. ...

15 May 2003 External T.I. 2003-00626-- summary under Paragraph 20(1)(c) Summary Under Tax Topics- Income Tax Act- Section 20- Subsection 20(1)- Paragraph 20(1)(c) extraction of appreciation Where a taxpayer satisfied the purchase price for an income-producing property by assuming a debt owing by the vendor to a third party and, at a subsequent date when the property has appreciated in value from $100 to $120, transfers the property to a partnership in consideration for $20 in cash (which is used for a non-income producing purpose) and a $100 partnership interest, interest on the debt will continue to be deductible. ...

9 March 2011 External T.I. 2003-0017231E5- Application of section 17-- summary under Subsection 17(1) Summary Under Tax Topics- Income Tax Act- Section 17- Subsection 17(1) The phrase "owes an amount" in s. 17(1) is not limited to money that is loaned, and includes unpaid consideration, amounts owing to a corporation in Canada, accrued liabilities in its favour and unpaid dividends. ...

25 February 2005 Ruling Case No. 56925 [discount not a device]-- summary under Coupon Summary Under Tax Topics- Excise Tax Act- Section 181- Subsection 181(1)- Coupon discount not a device An electronic discount made available by the manufacturer to all purchasers of the particular product from the retailer would not be considered to be a coupon, as the purchasers would not be in possession of any device that entitled them to a price reduction, and the retailer would not be accepting any device in full or partial consideration for the supply made by it. ...

2009 Ruling 2008-0304371R3- Single-Wing Butterfly-- summary under Subsection 20(24) Summary Under Tax Topics- Income Tax Act- Section 20- Subsection 20(24) portion of assets transferred to transferee corporation on butterfly treated as s. 20(24) payment In a single-wing butterfly of a company whose assets consisted of cash and cash equivalents, tenant receivables and a revenue producing rental property, the transferee corporation (B Sub Holdco) will assume various undertakings of the distributing corporation (Opco), and a joint s. 20(24) election will be made respecting the consideration paid by Opco for such assumption. ...

12 June 2003 Internal T.I. 2003-001100-- summary under Eligible Capital Expenditure Summary Under Tax Topics- Income Tax Act- Section 14- Subsection 14(5)- Eligible Capital Expenditure As a result of selling a business the taxpayer was no longer able to fulfill its obligations under a supply contract and negotiated a termination of the contract in consideration for the payment by it of a termination fee. ...