Gene decided to retire and sell his shares of Geno Inc., which meet all the tests for qualified small business corporation (QSBC) shares. His son, Mike, was interested in buying the company and they both agreed on the appraised value of $ 1,050,000, which is clearly the fair market value for the shares owned by Gene. Gene's shares have a paid-up capital (PUC) of $500 and an adjusted cost base(ACB) of $1,000. Gene has used all but $750,000 of his capital gains exemption. (a) If Mike buys these shares through a holding company (Holdco), in which he owns all of the common shares. Gene will transfer his shares of Geno Inc. to Holdco. As consideration, Gene will receive from Holdco debt of $751,000 and retractable, redeemable, non-voting preferred shares with a legal stated capital and fair market value of $299,000. Gene and Holdco will elect under subsection 85(1) to have an elected amount of $751,000, in order to use up Gene's remaining capital gains exemption. (i) What are the income tax consequences to Gene of the above transactions? Show all calculations. (ii) Very briefly indicate what should be done to avoid any immediate income tax consequences? (b) If the capital structure of Geno Inc. is reorganized. Gene will trade his common shares of Geno Inc. for debt of $751,000 issued by Geno Inc. and retractable, redeemable, non-voting preferred shares of Geno Inc., with a legally stated capital and fair market value of $299,000. 

(i) What are the income tax consequences to Gene of the above transactions? Show all calculations. 

(ii) Very briefly indicate what should be done to avoid any immediate income tax consequences?