Income Tax Act — I-3.3 107.4
cost amount to the taxpayer of that interest or part of it immediately before the particular time, and (ii) the taxpayer is deemed to acquire the capital interest or part of it in the transferee trust at a cost equal to the amount, if any, by which (A) that cost amount exceeds (B) the amount by which the taxpayer’s loss otherwise determined from the disposition referred to in subparagraph (i) would be reduced because of paragraph 107(1)(c) or (d) if the proceeds under that subparagraph were equal to the fair market value of the capital interest or part of it in the transferor immediately before the particular time; (k) where the transferor is a trust, a taxpayer’s beneficial ownership in the property ceases to be derived from the taxpayer’s capital interest in the transferor because of the qualifying disposition and no part of the taxpayer’s capital interest in the transferor was disposed of because of the qualifying disposition, there shall, immediately after the particular time, be added to the cost otherwise determined of the taxpayer’s capital interest in the transferee trust, the amount determined by the formula A × [(B - C)/B] - D where A is the cost amount to the taxpayer of the taxpayer’s capital interest in the transferor immediately before the particular time, B is the fair market value immediately before the particular time of the taxpayer’s capital interest in the transferor, C is the fair market value at the particular time of the taxpayer’s capital interest in the transferor (determined as if the only property disposed of at the particular time were the particular property), and D is the lesser of (i) the amount, if any, by which the cost amount to the taxpayer of the taxpayer’s capital interest in the transferor immediately before the particular time exceeds the fair market value of the taxpayer’s capital interest in the transferor immediately before the particular time, and (ii) the maximum amount by which the taxpayer’s loss from a disposition of a capital interest otherwise determined could have been reduced because of paragraph 107(1)(c) or (d) if the taxpayer’s capital interest in the transferor had been disposed of immediately before the particular time; (l) where paragraph (k) applies to the qualifying disposition in respect of a taxpayer, the amount that would be determined under that paragraph in respect of the qualifying disposition if the amount determined for D in that paragraph were nil shall, immediately after the particular time, be deducted in computing the cost otherwise determined of the taxpayer’s capital interest in the transferor; (m) where paragraphs (j) and (k) do not apply in respect of the qualifying disposition, the transferor is deemed to acquire the capital interest or part of it in the transferee trust that is acquired as a consequence of the qualifying disposition (i) where the transferee trust is a personal trust, at a cost equal to nil, and (ii) in any other case, at a cost equal to the excess determined under paragraph (b) in respect of the qualifying disposition; and (n) if the transferor is a trust and a taxpayer disposes of all or part of an income interest in the transferor because of the qualifying disposition and, as a consequence, acquires an income interest or a part of an income interest in the transferee trust, for the purpose of subsection 106(2), the taxpayer is deemed not to dispose of any part of the income interest in the transferor at the particular time. Fair market value of vested interest in trust (4) Where (a) a particular capital interest in a trust is held by a beneficiary at any time, (b) the particular interest is vested indefeasibly at that time, (c) the trust is not described in any of paragraphs (a) to (e.1) of the definition trust in subsection 108(1), and (d) interests under the trust are not ordinarily disposed of for consideration that reflects the fair market value of the net assets of the trust, the fair market value of the particular interest at