Exceptions from Subsection 55(2) - CCH Canadian
Exceptions from Subsection 55(2) - CCH Canadian
Exceptions from Subsection 55(2) - CCH Canadian
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Application of Butterfly Denial Rules —Spin-off Butterfly ExampleShareholder(s)100% 100%TransfereeDCAsset 1Asset 2Paragraph <strong>55</strong>(3.1)(a) “Property Becoming Property” Rule• DC cannot acquire property in contemplation of butterfly distribution• Intended to prevent change in mix of types of property of DC• Intended to prevent parties <strong>from</strong> exchanging or “swapping” properties• <strong>Exceptions</strong> for certain related-party transfers– e.g., DC could transfer property to subsidiary of DC• Sale of property for cash or non-convertible debt before butterfly is allowed© 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 42