The appellants acquired interests in a foreign partnership that had incurred substantial potential losses from a condominium project.
The original partners withdrew, and the appellants sold the condominium project back to them at fair market value, realizing a large loss which they claimed on their Canadian income tax.
The appellants also continued to profitably manage a low-rent apartment building that was an ancillary asset of the partnership.
The Minister disallowed the losses, and the lower courts upheld this decision.
The Supreme Court of Canada allowed the appeal, finding that the three essential ingredients of a valid partnership—carrying on business, in common, with a view to profit—were met, notwithstanding that the primary motivation was to acquire a tax loss.
