Exceptions from Subsection 55(2) - CCH Canadian

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Spin-off Butterfly — Basic StepsBeforeShareholder(s)DCAsset 1(40% of net FMV)Asset 2(60% of net FMV)• Distributing Corporation is owned by several unrelated shareholders• Asset 1 is to be spun-off to a new corporation owned by all of theshareholders of DC© 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 23
Spin-off Butterfly — Basics StepsCreation of Transferee and Permitted ExchangeShareholder(s)60%Transferee40%DCAsset 1(40% of net FMV)Asset 2(60% of net FMV)• All DC shareholders transfer 40% of their DC shares to new corporation(“Transferee”)• The transfer of shares is called a “permitted exchange”• Rollovers available under subsection 85(1) or section 85.1© 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 24
Page 1 and 2: Understanding Section55 and Butterf
Page 3 and 4: Agenda• Overview of Subsection 55
Page 5 and 6: Overview of Subsection 55(2)• Ant
Page 7 and 8: Purpose of Subsection 55(2) —Exam
Page 9 and 10: Purpose of Subsection 55(2) —Exam
Page 11 and 12: Subsection 55(2) —Part of a Serie
Page 13 and 14: What Happens if Subsection 55(2) Ap
Page 15 and 16: First Exception: Income Earned or R
Page 17 and 18: Third Exception:Subsection 55(3)(a)
Page 19 and 20: Types of Butterflies© 2010 KPMG LL
Page 21 and 22: Types of Butterflies — Split-up v
Page 23: Spin-off Butterfly —AfterAB60%40%
Page 27 and 28: Spin-off Butterfly — Basics Steps
Page 29 and 30: Full Split-up ("Double-wing") Butte
Page 31 and 32: Full Split-up Butterfly — Basic S
Page 33 and 34: Qualifying for the Exemption© 2010
Page 35 and 36: Distribution - Subsection 55(1) Def
Page 37 and 38: Pro Rata Test• Gross or Net Asset
Page 39 and 40: Look-Through Concept• Property de
Page 41 and 42: Butterfly Denial Rules© 2010 KPMG
Page 43 and 44: Application of Butterfly Denial Rul
Page 49 and 50: Public Company Spin-off Rules• Pu
Page 51 and 52: Related Issues• Part IV tax and R

Exceptions from Subsection 55(2) - CCH Canadian

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