In 3295940 CANADA INC. v R, 2024 FCA 42, the taxpayer appealed the application of the GAAR to a series of transactions that used ACB in shares of a corporation that the purchaser refused to purchase. The transactions, in effect, used the “stranded” ACB in the course of a reorganization that saw the target shares transferred to a newly-incorporated corporation. Ultimately, the related taxpayers realized a capital gain that was equal to the gain that would have been realized taking into account the stranded ACB. The Tax Court had upheld the application of the GAAR (2022 TCC 68). The Federal Court of Appeal allowed the appeal on the basis that, in considering whether to apply GAAR, it was necessary to consider the overall effect of the entire series of transactions and not just the effect of a subset of those transactions. The Tax Court was wrong to refuse to compare what was achieved with the result that would have been obtained if the vendor had been able to use the stranded ACB.