Emily owned common shares in an operating company, BB Inc. These shares are qualifying small business corporation shares. On incorporation, in 2006, the shares were issued by BB Inc. to Emily for $1,000 in cash. Emily has worked full-time managing the business since incorporation. At the present time, the shares are valued at $85,000. Emily was advised to crystallize $84,000 of her capital gains exemption. A holding corporation, Holdco Ltd., was incorporated. She transferred her common shares in BB Inc. to Holdco Ltd., electing at $85,000 under Section 85. As consideration, Emily received from Holdco Ltd. a note for $84,000 and common shares valued at $1,000.

 

Describe the tax consequence of this transaction.