In an ITA 86 exchange of shares in a reorganization, if the transaction involves a gift to a related party, the proceeds of the disposition for capital gains purposes on the old shares will be equal to the lesser of:
• the non-share consideration, plus the gift and
• the fair market value of the old shares.

Question

Quizplus · Accepted Answer

The proceeds of the disposition for capital gains purposes on the old shares will be equal to the fair market value of the old shares, regardless of whether the transaction involves a gift to a related party or not.

In an ITA 86 Exchange of Shares in a Reorganization