RE:Tax Accountant by trade - here is your response@hiddensecrets, thank you for the great explanation and example, but I had one question. Why does s 85 only apply to preferred shares? In a butterfly transaction (and I understand that this is for spinning off assets and not amalgamating) common shares can be exchanged for preferred shares of the parent and spin-off entities, and as long as the exchange is at FMV the transaction is tax neutral due to s85. Is there something about a butterfly transaction I am overlooking where the transaction of amalgamating is not similar and s 85 doesn't apply.
Thanks for any clarification, and I appreciate the previous post.