Income Tax Act — I-3.3 107
 reacquired the property at the particular time at a cost equal to that fair market value. Other distributions (2.1) Where at any time a property of a trust is distributed by the trust to a beneficiary under the trust, there would, if this Act were read without reference to paragraphs (h) and (i) of the definition disposition in subsection 248(1), be a resulting disposition of all or any part of the beneficiary’s capital interest in the trust (which interest or part, as the case may be, is in this subsection referred to as the “former interest”) and the rules in subsections (2) and (3.1) and sections 88.1 and 132.2 do not apply in respect of the distribution, (a) the trust is deemed to have disposed of the property for proceeds equal to its fair market value at that time; (b) the beneficiary is deemed to have acquired the property at a cost equal to the proceeds determined under paragraph (a); (c) unless the trust is a mutual fund trust, the beneficiary’s proceeds of disposition of the portion of the former interest disposed of by the beneficiary on the distribution are deemed to be equal to the amount, if any, by which (i) the proceeds determined under paragraph (a) (other than the portion, if any, of the proceeds that is a payment to which paragraph (h) or (i) of the definition disposition in subsection 248(1) applies) exceed the total of (ii) where the property is not a Canadian resource property or foreign resource property, the amount, if any, by which (A) the fair market value of the property at that time exceeds the total of (B) the cost amount to the trust of the property immediately before that time, and (C) the portion, if any, of the excess that would be determined under this subparagraph if this subparagraph were read without reference to this clause that represents a payment to which paragraph (h) or (i) of the definition disposition in subsection 248(1) applies, and (iii) all amounts each of which is an eligible offset at that time of the taxpayer in respect of the former interest; (d) notwithstanding paragraphs (a) to (c), where the trust is non-resident at that time, the property is not described in paragraph (2.001)(b) or (c) and, if this Act were read without reference to this paragraph, there would be no income, loss, taxable capital gain or allowable capital loss of a taxpayer in respect of the property because of the application of subsection 75(2) to the disposition at that time of the property, (i) the trust is deemed to have disposed of the property for proceeds equal to the cost amount of the property, (ii) the beneficiary is deemed to have acquired the property at a cost equal to the fair market value of the property, and (iii) the beneficiary’s proceeds of disposition of the portion of the former interest disposed of by the beneficiary on the distribution are deemed to be equal to the amount, if any, by which (A) the fair market value of the property exceeds the total of (B) the portion, if any, of the amount of the distribution that is a payment to which paragraph (h) or (i) of the definition disposition in subsection 248(1) applies, and (C) all amounts each of which is an eligible offset at that time of the taxpayer in respect of the former interest; and (e) where the trust is a mutual fund trust, the distribution occurs in a taxation year of the trust before its 2003 taxation year, the trust has elected under subsection (2.11) in respect of the year and the trust so elects in respect of the distribution in prescribed form filed with the trust’s return of income for the year, (i) this subsection shall be read without reference to paragraph (c), and (ii) the beneficiary’s proceeds of disposition of the portion of the former interest disposed of by the beneficiary on the distribution are deemed to be equal to the amount determined under paragraph (a). Gains not distributed to beneficiaries (2.11) If a trust that is resident in Canada for a taxation year makes in the taxation year one or more distribu