Where an individual holds all the common shares and preferred shares of B Ltd., and there is an accrued gain of $400,000 on the common shares, $50,000 of which may be attributable to the fact that the accrued but unpaid dividends on the preferred shares of B Ltd. total $50,000, then the individual can roll his common shares of B Ltd. into Newco at an elected amount of $350,000, thereby giving rise to a capital gain that is not subject to s. 110.6(8); however, s. 110.6(8) will apply to a $50,000 gain on the sale of the shares of Newco.
