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(Tax Window, No. 18, p. 2, ¶1831)-- summary under Paragraph 85(1)(b) Summary Under Tax Topics- Income Tax Act- Section 85- Subsection 85(1)- Paragraph 85(1)(b) Where, in connection with the transfer by Opco to its parent, Holdco, of property subject to debt in excess of the property's ACB, Holdco first assumes the excess debt in consideration for a promissory note of Opco, and then Holdco surrenders that promissory note to Opco in consideration for the redemption of preference shares issued by Holdco to Opco on the transfer, s. 85(1)(b) will not apply to alter the agreed amount (being the property's ACB), i.e., the allocation of the assumed debt as consideration for the promissory note of Opco rather than as consideration for the transfer of the property will be respected. ...

By virtue of the First Merger, each common and preferred share of Target was converted into the right to receive the applicable “Merger Consideration,” being the “Share Consideration” (being common shares to be issued by XXXXXXXXXX being the direct (apparently Canadian-resident) parent of Opco – referred to herein as Parent) and the “Cash Consideration.” ... Upon the First Merger occurring, and pursuant to the “Funding Agreement” between Parent, Opco, Merger Sub1 and Merger Sub2: Merger Sub1 issued a number of additional common shares (the “Additional Merger Sub1 Shares”) having an agreed FMV equal to the FMV of the aggregate Share Consideration; and Parent added to the stated capital account maintained for its common shares an amount equal to the aggregate FMV of the Share Consideration. ... The Opco Capital Contribution resulted in an increase in the ACB to Parent of its shares in Opco, pursuant to s. 53(1)(c), in an amount equal to the FMV of the aggregate Share Consideration. ...

2 December 2014 CTF Roundtable Q. 3, 2014-0547251C6- Q.3- Restrictive Covenants-- summary under Paragraph 56.4(6)(e) Summary Under Tax Topics- Income Tax Act- Section 56.4- Subsection 56.4(6)- Paragraph 56.4(6)(e) recital of nominal consideration Would CRA reconsider 2014-0522961C6, so that the allocation in an agreement of $1 of consideration to a restrictive covenant does not constitute proceeds for the purpose of paragraphs 56.4(6)(e) and (7)(d)? CRA responded that it: is now prepared to accept that where a contract relating to granting a restrictive covenant uses words such as "$1 and other good and valuable consideration" simply to ensure that the contract is legally binding…such consideration will not, in and of itself, constitute proceeds received or receivable by the particular party for granting the RC for purposes of paragraph 56.4(6)(e) and paragraph 56.4(7)(d). ... If more than nominal consideration of $1 is paid…the amount of proceeds (or any additional amount deemed to be proceeds by paragraph 68(c)) received or receivable by the taxpayer for the RC would be taxable as ordinary income under subsection 56.4(2) unless one of the three exceptions in subsection 56.4(3) otherwise applies. ...

24 January 2011 Internal T.I. 2010-0389251I7 F- Farm-out agreement and warrants-- summary under Options Summary Under Tax Topics- General Concepts- Fair Market Value- Options amount allocated out of consideration to “free” warrants based on the greater of their trading and in-the-money value A mining exploration corporation (the "Purchaser") agreed with another mining exploration corporation (the "Vendor") to acquire an interest in the Vendor's unproven resource properties (the "Properties") in consideration for incurring specified exploration expenses. As part of this agreement, the Vendor also agreed to issue, for no significant consideration, warrants to the Purchaser to acquire treasury common shares. After indicating that the amount of the Canadian exploration expense otherwise considered to be incurred by the Purchaser was to be reduced by the value of the warrants, the Directorate commented on their valuation as follows: In determining the portion of the total consideration for the warrants, we would consider the amount that would have been the benefit under subsection 15(1) if no consideration had been paid for the warrants. ...

18 December 2003 Internal T.I. 2003-0044007 F- OPTION D'ACHAT D'ACTIONS RACHETEES-- summary under Paragraph 7(1)(b) Summary Under Tax Topics- Income Tax Act- Section 7- Subsection 7(1)- Paragraph 7(1)(b) full option surrender consideration included under s. 7(1)(b) even though a portion thereof never paid The taxpayer surrendered his stock options to his arm’s-length employer for consideration that was payable partly up front and partly in instalments that were conditional on the employee’s continued employment for a specified period (a condition which he satisfied) and came due in years subsequent to that of the surrender. In finding that the taxpayer was required to include the full consideration paid or payable for the surrender in his income under s. 7(1)(b) notwithstanding that a portion of that consideration was not paid, the Directorate stated: The Act does not provide any qualification if the consideration for the disposition of the options is accompanied by a balance of sale, nor does it provide any relief in the event that the purchaser of the options fails to meet the purchaser’s obligations with respect to the payment of the option purchase price. ...

The dividend-in-kind of the life insurance policy by a corporation (Aco) to its shareholder is made for no consideration for purposes of s. 148(7)(a)(ii)(B), so that on the dividend-in-kind, the policy is deemed to be disposed of for the greatest of its ACB, CSV and the (nil) consideration received- or $150. However, where a trust transfers the policy to its beneficiary, the beneficiary (Xco) is regarded as giving consideration for the transfer that is all or any part of the beneficiary's income or capital interest in the trust, as applicable. Here, it would be reasonable to consider that such consideration had an FMV of $250. ...