Depreciable property with a cost of $20,000, a fair market value (FMV) of $40,000, and an undepreciated capital cost (UCC) of $15,000 is transferred to a corporation in a Section 85 Rollover. Selecting an elected transfer price of $18,000 will result in

A.

recapture of $3,000 for the transferor as the elected transfer price becomes the proceeds of disposition for the property.

B.

a capital gain of $3,000 for the transferor as the elected transfer price becomes the proceeds of disposition for the property.

C.

the capital cost of the property for the transferee (corporation) to be $18,000.

D.

a terminal loss of $3,000, which would be disallowed under ITA 85.