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In finding that the vendors, and Abacus and NH Properties, were not dealing with each other at arm’s length, Boyle J stated (at paras. 155, 161): Given the agreement for Abacus to pay a premium to the co-owners to purchase the co-owners’ interests … the steps and the amounts in the series of transactions cannot be considered to reflect ordinary commercial dealings. … Harvard Properties, Abacus and NH Properties clearly acted together to dictate [the] Newcos’ actions from their inception and throughout the closing of this series of transactions. ...

CRA considered that such reduction occurred, so that virtually none of Stock Dividend 2 came out of SIOH of the taxpayer respecting its shares of Newco 3 (see 6). ...