Nancy owns all of the shares of N Ltd., a Canadian-controlled private corporation with investments in numerous Canadian public companies. Her husband, Richard, owns all of the shares of R Ltd., a Canadian-controlled private corporation. They have decided to have R Ltd. purchase the shares of N Ltd. The shares of N Ltd. are currently worth $600,000 and have a PUC and ACB of $50,000. The plan is for R Ltd. to pay Nancy $50,000 in cash and preferred shares of R Ltd. worth $550,000. Nancy and Richard have agreed to make a joint election under section 85 of the Income Tax Act in order to defer tax on the transaction. Income tax reference: ITA 84.1, 85(1).
Determine the tax consequences for Nancy.