Eric owns common shares of CNR, a Canadian public company. His shares have the following attributes:
Fair market value………………… $12,000
Adjusted cost base………………… 4,000
Paid-up capital……………………. 1
CPC, a widely held Canadian public company, has acquired all of the shares of CNR. In exchange for his shares of CNR, Eric received common shares of CPC worth $12,000. Income tax reference: ITA 85.1, 85(1).
Determine the tax consequences for Eric.