Glen Sykes has been running his business, Steepwater Surf for six years as a sole proprietorship. During the start-up

phase, he wanted to be able to use the losses from the business against his other sources of income. Glen is expecting

Steepwater Surf to become profitable next year, so he wants to incorporate the business to be able to use the small

business deduction to defer income tax. The business currently has a net capital loss carryforward of $40,000 and, in the

current year, Glen has no other sources of income. His most recent notice of assessment indicates he also has $30,000 of

non-capital losses carrying forward from a prior year. The details of the assets of the business are as follows:

CCA

Description Class Cost UCC FMV

Land n/a 100,000 n/a 402,000

Building 1 300,000 243,000 263,000

Equipment 10 200,000 104,000 50,000

Vacant land ** n/a 100,000 n/a 300,000

Van 8 20,000 5,000 15,000

Total 720,000 352,000 1,030,000

** 4 years ago, Glen purchased a piece of land near Youbou, BC. His intent is to rezone and split the land into smaller

pieces, build lakefront cabins on each piece and sell them.

Glen has approached you about the possibility of transferring the assets of his Steepwater Surf proprietorship to his brand

new corporation, Big Wave Boards Inc. He would also like to move the Youbou land into the same corporation.

Required: Big Wave Boards Inc. will be 100% owned by Glen. Glen doesn't want to pay any tax on the transfer to the

corporation and he has heard about transferring assets to a corporation under Section 85. He has also asked you to

calculate the appropriate elected amounts for the transfer, assuming he wants to take back a promissory note payable to

him in the amount of $100,000 plus take out cash of $3,000 at the time of the transfer. You should also identify any

amounts that cannot be transferred under Section 85.

A. In the case of Glen, the elected amounts for each asset would be as follows:

B. The ACB of Glen's shares is:

C. The PUC of Glen's shares will be: