The Appellants, executives of a wealth management firm, transferred common shares to family trusts shortly before the firm's initial public offering (IPO).
They reported the disposition based on a historical valuation formula.
The Minister reassessed them beyond the normal reassessment period, alleging a misrepresentation of the shares' fair market value due to neglect or carelessness.
The Tax Court found that the impending IPO significantly increased the shares' value and that the Appellants were negligent in failing to consider this or seek independent valuation.
The appeals were allowed only to the extent of the Minister's concession at trial regarding the fair market value.
