2003 Income Tax Severed Letter 2003-0006741 - Loss Carryforward Under 111(5)

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CRA.
Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ARC.

Please note that the following document, although believed to be correct at the time of issue, may not represent the current position of the CCRA.

Prenez note que ce document, bien qu'exact au moment émis, peut ne pas représenter la position actuelle de l'ADRC.

Principal Issues: Amendments to Ruling 2002-015134

Position: The amendments are acceptable

Reasons: N/A

XXXXXXXXXX 2003-000674

XXXXXXXXXX , 2003

Dear XXXXXXXXXX:

Re: XXXXXXXXXX
XXXXXXXXXX
Amendments to Advance Income Tax Ruling 2002-015134

Further to your letter of XXXXXXXXXX, we confirm the following amendments to the above-noted advance income tax ruling issued on XXXXXXXXXX, 2002 (hereinafter referred to as the "Ruling").

Proposed Transactions

1. Paragraph 21 of the Ruling is replaced with the following:

Under the Capital Reorganization component of the Lossco Proposal, all of the issued and outstanding voting common shares and preferred shares of Lossco will be converted into 1 voting preferred share (the "Lossco Preferred Share") having a nominal redemption amount. In addition, a new class of voting common shares will be authorized but not issued. As a result, the issued share capital of Lossco immediately following the Capital Reorganization will be limited to a single Lossco Preferred Share to be held by the trustee-in-bankruptcy on behalf of the shareholders.

2. Paragraph 23 of the Ruling is replaced with the following:

Subsequent to the Capital Reorganization, the following transactions will occur in sequence on XXXXXXXXXX as part of the Lossco Proposal:

(i) Parentco, the parent corporation of Opco, will subscribe for 1 Lossco Preferred Share;

(ii) Lossco will redeem the Lossco Preferred Share held by the trustee-in-bankruptcy for aggregate consideration of $XXXXXXXXXX, which will result in Parentco becoming the sole shareholder of Lossco;

(iii) Parentco will subscribe for 1 common share of Lossco for $XXXXXXXXXX; and

(iv) Lossco will redeem the remaining Lossco Preferred Share held by Parentco with the result that Parentco will own only the single common share referred to in (iii) above, which will have a paid-up capital of $XXXXXXXXXX.

3. The reference to "XXXXXXXXXX" in the first sentence of Paragraph 24 is replaced with "XXXXXXXXXX".

Rulings Given

4. The references to "XXXXXXXXXX" in Rulings E and G are replaced with "XXXXXXXXXX".

We confirm that the amendments enumerated above will not otherwise affect the rulings given in the Ruling and that, subject to the conditions set out therein, they will continue to be binding on the Canada Customs and Revenue Agency in accordance with the practice outlined in Information Circular 70-6R5 dated May 17, 2002, provided that the proposed transactions, as hereby amended, are completed by XXXXXXXXXX.

Yours truly,

for Director
Reorganizations and Resources Division
Income Tax Rulings Directorate
Policy and Legislation Branch
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