A post-mortem tax strategy used to avoid double taxation on private-corporation shares held at death. On death, the shares face capital-gains tax under the deemed disposition; without planning, the corporation's retained earnings are then taxed again as a dividend when distributed. A pipeline addresses this by having the estate transfer the shares to a new holding company in exchange for a promissory note equal to the stepped-up cost base, then extracting the corporate value over time and repaying the note as a return of capital rather than a taxable dividend.
Properly executed, the underlying value is taxed once — as the capital gain at death — instead of twice. Pipelines require an appropriate holding period and careful execution, and the tax authority's positions on them evolve.