The child disposes of the property within three years and claims the capital gains exemption. Although the purpose of the disposition of the property to the child is to gain access to multiple capital gains exemptions, the subsequent sale of the property by the child is not anticipated at the time of the transfer to the child. Some provinces have enacted legislation regarding the amount of farmland that one individual can own.
Estate planning is also a motivation for the transaction.
After one year, Farmco is incorporated with Father and Son as the common shareholders. The provision requires that the deduction be available with respect to the subsequent disposition.