Successor corporation rules-an update

"The February 18, 1987, Federal Budget contains a proposed amendment which would simplify somewhat the ""successor corporation"" rules in the Income Tax Act. Despite this amendment, though, the important successor rules will continue to be relatively complex.IntroductionThe February 18, 1987, Federal Budget papers propose an income tax amendment whereby the so-called ""successor corporation"" rules would be revised by removing the present provision which limits the application of these rules to a maximum of two ""successions"". The successor corporation rules represent one of the most complicated sets of rules in the Income Tax Act. This month, Tax Notes seeks to explain these rules and the proposed amendment in simplified terms.Basically, the successor rules provide a mechanism for transferring unused exploration and development expenses from one taxpayer to another , in specified circumstances. The aforementioned limitation of two successions refers to the rule which allows a maximum of two such transfers with respect to any particular pool of deductions."