Whether a partnership and a corporation are dealing at arm's length with each other is a question of fact. A series of examples were given. For example, if two brothers each own 50% of a partnership and their wives each own 50% of the voting shares of Opco, whether the partnership and Opco are dealing at arm's length could only be determined on the basis of the facts, and the nature of any transactions between the two entities would be of significance. Where depreciable property is transferred from the partnership to Opco, the depreciables would not be considered to be transferred from the individual partners some of whom were at arm's length and some of whom were not at arm's length. Instead, all the depreciables would be treated as being transferred in either an arm's length transaction or a non-arm's length transaction.
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