In $2016,$ Manjusha Reyes commenced carrying on a small manufacturing business in a rented property as a sole proprietor. As she did not expect the business to be profitable in the first few years, she initially decided not to incorporate the business. As a result, she was able to use her business losses against her employment income for those first few years. By $2019,$ the business began to show a large annual profit. At this time, the tax cost of the business properties was $$844,000,$ and it was estimated that their FMV was $$1,809,600.$ Given that the business was now profitable, Manjusha decided to incorporate. Using the rollover provisions of ITA $85(1),$ all of the business properties were sold to a newly incorporated company, Reyes Inc. The combined elected amounts for the business properties was $$844,000.$ The only consideration that Manjusha received was $17,400$ common shares in the new corporation with a FMV of $$1,809,600.$ No other shares of Reyes Inc. have been issued.On January $1,2023,$ Manjusha receives an offer from Glenville Ltd$.$ To acquire all of the Reyes Inc. shares in return for $24,000$ of that company shares. The Glenville Ltd$.$ Shares have a total FMV of $$2,496,000.$ Any capital gain on the shares of Reyes Inc. would not qualify for the capital$-$gains deduction.Requirement A$.$ Advise Manjusha with respect to the income tax consequences that would arise for her from accepting the Glenville Ltd$.$ offer. Your answer should consider both the automatic rollover application of ITA $85\mathrm{.}1$ and any method that involves opting out of the rollover.Start by calculating the ACB of the Reyes Inc. common shares Manjusha received as consideration. $($For entries with a $$0$ balance, make sure to enter $"0"$ in the appropriate input field.$)$Elected amount Less: FMV of NSC ACB of common shares Part $2$Next, calculate the adjusted cost base of the Reyes Inc. common shares Manjusha received as consideration. $($For entries with a $$0$ balance, make sure to enter $"0"$ in the appropriate input field.$)$Increase in legal capital Less excess, if any:Elected amount Less: FMV of NSC Amount of excess PUC reduction Part $3$Now, calculate the paid$-$up capital of the common shares Manjusha received as consideration.Increase in legal capital Less: PUC reduction PUC of common shares Part $4$Determine the incomes tax consequences for Manjusha if she does not opt out of ITA $85\mathrm{.}1.$ Complete the following sentences:Manjusha would be deemed to have disposed of her Reyes Inc. shares at an amount equal to their fair market value.reduction in paid$-$up capital.adjusted cost base. The disposition will have no capital gain or capital loss.a capital gain.a capital loss. Manjusha would be deemed to have acquired her Glenville Ltd$.$ shares at a cost equal to the fair market value.adjusted cost base.reduction in paid$-$up capital. After the paid$-$up capital reduction, the paid$-$up capital of the Glenville Ltd$.$ shares that have been issued to Manjusha would be equal to the fair market value.reduction in paid$-$up capital.adjusted cost base. This ensures that the paid$-$up capital of the Reyes Inc. shares is greater than the paid$-$up capital of the Glenville Ltd$.$ shares.equal to the paid$-$up capital of the Glenville Ltd$.$ shares.less than the paid$-$up capital of the Glenville Ltd$.$ shares.Part $5$Next, calculate the taxable capital gain in Manjusha's income tax return for the year of the exchange if she opts out of ITA $85\mathrm{.}1.$Fair market value of Glenville Ltd$.$ shares Less: ACB of Reyes Inc. common shares Capital gain Inclusion rate$(1-$: $2)$Taxable capital gain Part $6$Is there any other method that involves opting out of the rollover?A$.$An allocation of consideration can be used to treat the entirety of the share exchange as a taxable event.B$.$A share$-$for$-$share can be used to treat the entirety of the share exchange as a taxable event.C$.$An allocation of consideration can be used to treat part of the share exchange on a rollover basis and the other part as a taxable event.D$.$No other method can be used to opt out of the rollover.Part $7$Requirement B$.$ Calculate the ACB of the Reyes Inc. shares to Glenville Ltd$.$Complete the following sentence:The ACB of the Reyes Inc. shares to Glenville Ltd$.$ is the greater of their PUC and their NSC$.$lesser of their FMV and their PUC.greater of their FMV and their PUC.greater of their FMV and their NSC$.$lesser of their FMV and the NSC$.$lesser of their NSC and their PUC.Part $8$Answer the following question:What is the ACB of the Reyes Inc. shares to Glenville Ltd$.?$