Administrative Policy
90 C.R. - Q33
Contrary to its earlier position, RC now accepts that s. 54.2 applies to a disposition by a partnership for shares.
10 November 89 T.I. (April 90 Access Letter, ΒΆ1178)
s. 54.2 is not available with respect to the transfer of all the assets of a limited partnership to a corporation under s. 85(2) followed by a sale of the shares to an arm's length purchaser, because the limited partnership is not a person under the Act.
89 C.R. - Q33
Because a partnership is not a person, the provisions of s. 54.2 do not apply where the disposition is made by a partnership.
89 C.R. - Q13
RC can confirm the application of s. 54.2 where the applicant represents that the property transferred to the corporation for consideration including treasury shares will consist of 90% or more (measured by fair market value) of all of the property used by the transferor in an active business carried on by the transferor. Since the intent of s. 54.2 is to provide capital gains treatment on a pre-ordained plan to dispose of the shares of the transferee, s. 245 will not apply.