Suppose that Holdco owns all of the shares of both Realco and Opco. All three corporations have the same year-end. In year 1, Realco sells real property and realizes a large gain that generates passive income in excess of $150,000. Opco’s small business deduction limit might be ground to nil in year 2 unless Realco winds-up and dissolves before the end of year 1. If Realco winds-up and dissolves before the end of year 1, Opco’s small business deduction limit will be unaffected by the Holdco passive income.
Martin Lee and Thanusan Raveendran, “Possible Anomaly in the Passive Income SBD Grind?” 9:4 Canadian Tax Focus (November 2019)