Exceptions from Subsection 55(2) - CCH Canadian

Pro-Rata Distribution Requirement —Split-up Butterfly ExampleABDCTransfereeFMV $600 FMV $400Opco 1 Opco 2• In earlier split-up butterfly example, DC was required to transfer or “distribute” 40%of each type of property (net of liabilities) to Transferee• Shares of Opco 2 must represent 40% of each type of property– Look to underlying assets / liabilities of Opco 1 and Opco 2© 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 39