Exceptions from Subsection 55(2) - CCH Canadian

Split-up Butterfly —AfterABDCTransfereeFMV $600 FMV $400Opco 1 Opco 2• A split-up butterfly involves a transfer of property of the DC to one or more corporateshareholders (the Transferee Corporations)• In a split-up butterfly, a shareholder or group of shareholders takes its proportionate share of theDistributing Corporations’ assets and liabilities and exits• This is an example of a “single-wing” split-up (one Transferee)• The basic requirements for a split-up butterfly are contained in paragraph (b)(ii) of the definitionof “permitted exchange” in subsection 55(1)© 2010 KPMG International Cooperative (“KPMG International”). KPMG International provides no client services and is aSwiss entity with which the independent member firms of the KPMG network are affiliated 21