http://decision.tcc-cci.gc.ca/tcc-cci/decisions/en/item/71768/index.do 
Barrasso v. The Queen (May 5, 2014, 2014 – 2014 TCC 156) was another value shifting tax structure case similar to two that the Federal Court of Appeal decided against taxpayers in 2012,
1207192 Ontario Ltd. v. Her Majesty the Queen and
Triad Gestco Ltd. v. Her Majesty the Queen:
http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/37605/index.do
(leave to appeal to the Supreme Court of Canada denied, 2013 CarswellOnt 3394)
http://decisions.fca-caf.gc.ca/fca-caf/decisions/en/item/37601/index.do
[4] The appellant operates a real estate business. He realized capital gains of over $30,000,000 in 2005, of $34,632,636 in 2006 and of $48,931.50 in 2007 from the sale of certain properties.
[5] In December 2005, the appellant undertook the following series of transactions:
-On December 5, 2005, the appellant incorporated Les Immeubles Molibec Inc. (“Immeubles Molibec”) under Part IA of Quebec’s Companies Act.
-Immeubles Molibec issued Class A common shares in consideration of a demand note, which bore no interest and allowed Immeubles Molibec to receive $22,500,000 from the appellant on demand.
-On December 6, 2005, Immeubles Molibec declared a dividend on the 100 Class A common shares held by the appellant. The dividend was payable by the issuance of 100 Class H preferred shares that had a total redemption value of $22,500,000 and a paid-up capital of $100.
– On December 6, 2005, the appellant sold 50 Class A common shares of Immeubles Molibec to each of his two sons, Marcello Barrasso and Agostino Barrasso, for an amount of $1 per share.
-The disposition by the appellant of 100 Class A common shares of Immeubles Molibec resulted in a capital loss of $22,499,900.
[6] In December 2006, the appellant undertook a second series of transactions:
-On December 12, 2006, the appellant incorporated Les Investissements Molibec (“Investissements Molibec”) under Part IA of Quebec’s Companies Act.
-The appellant became the sole shareholder of Investissements Molibec by subscribing for 100 Class A common shares at a price of $345,000 per share for a total of $34,500,000, and for 100 Class C preferred shares at a price of $1 per share.
-Investissements Molibec issued Class A common shares in consideration of a demand note, which bore no interest and allowed Investissements Molibec to receive $34,500,000 from the appellant on demand.
-On December 15, 2006, Investissements Molibec declared a dividend of $345,000 per share on the 100 Class A common shares held by the appellant. The dividend was payable by the issuance of 3,450 Class G preferred shares that had a total redemption value of $34,500,000 and a paid-up capital of $34.50.
-On December 18, 2006, the appellant sold 50 Class A common shares of Investissements Molibec to each of his two sons, Marcello Barrasso and Agostino Barrasso, for an amount of $1 per share.
– The disposition of 100 Class A common shares of Investissements Molibec resulted in a capital loss of $34,499,900.
[7] Finally, in December 2007, the appellant undertook a third series of transactions:
-On December 19, 2007, the appellant subscribed for 1,644 Class B common shares of Immeubles Molibec at the price of $4,652.04 in exchange for a demand note, which bore no interest and allowed Immeubles Molibec to receive $7,500,000 from the appellant on demand.
-On December 19, 2007, Immeubles Molibec declared a dividend of $4,562.04 per share on the 1,644 Class B common shares held by the appellant. The dividend was payable by the issuance of 33 Class H preferred shares that had a total redemption value of $7,500,000 and a paid-up capital of $33.
-On December 19, 2007, the appellant sold 822 Class B common shares of Immeubles Molibec to each of his two sons, Marcello Barrasso and Agostino Barrasso, for an amount of $1 per share.
-The disposition of 1,644 Class B common shares of Immeubles Molibec resulted in a capital loss of $7,499,967.
[8] The appellant disputed neither the fact that the capital losses created by these transactions constituted a tax benefit within the meaning of subsection 245(1) of the ITA nor the fact that some of these transactions were not undertaken or arranged for bona fide purposes within the meaning of subsection 245(3) of the ITA. The tax benefit resulted from avoidance transactions.
[9] The only issue before the Court is whether the avoidance transactions resulted in each case in a misuse or abuse of paragraphs 38(b), 39(1)(b) and 40(1)(b) of the ITA.
The taxpayer argued that his case could be distinguished from the earlier decisions because, among other factors, he did not use a trust structure:
[14] Counsel for the appellant emphasizes two elements of this case that differ from 1207192 and Triad Gestco. First, the taxpayer in this case sold his original shares to his two sons, whereas in 1207192 and Triad Gestco the taxpayers sold their shares to trusts.
[15] Second, in the case at bar, the taxpayer is an individual. In 1207192 and Triad Gestco, of course, the two taxpayers were companies.
[16] The appellant submits that these two differences are sufficient to enable the Court to conclude that there was no misuse or abuse of paragraphs 38(b), 39(1)(b) and 40(1)(b) within the meaning of subsection 245(3) of the ITA.
[17] I disagree.
The Tax Court held the artificiality of the structure did not turn on the presence of an intervening trust:
[23] However, it is clear that the artificial nature of the losses in question in 1207192 and Triad Gestco did not stem from the fact that there was a transfer of shares to a trust in each case. Rather, the artificiality of the losses stemmed from the value shift that occurred between two classes of shares held by the taxpayer. It appears to me that the decisions of the Federal Court of Appeal in those two cases would have been the same regardless of the identity of the purchaser of the shares whose value had decreased or regardless of the existence of a non-arm’s length relationship between the purchaser and the taxpayer. For this reason, the amendments made to the definition of the term “affiliated persons” in 2005 are not relevant in the present case.
[24] In conclusion, I can make no distinction between the facts before me and those in 1207192 and Triad Gestco, and I therefore find that the appellant has not shown that subsection 245(4) must be invoked to vacate the assessment under appeal.
As a result the appeal was dismissed with costs.