Question
J Inc. is a Canadian-controlled private corporation that conducts its business in Canada. The sole shareholder, Jimmy, is considering selling the company and would like
J Inc. is a Canadian-controlled private corporation that conducts its business in Canada. The sole shareholder, Jimmy, is considering selling the company and would like to know if J is a qualified small business corporation (QSBC).
The fair market value of the assets is listed below:
The relative values of the assets and liabilities have not fluctuated during the past 24 months. During that time, Jimmy has been the only shareholder.
Required:
Determine if J Inc. is a qualified small business corporation. Determine whether each of the QSBC tests is met. Assume the cash does not constitute "excess cash" and is instead an asset used in an active business. Show all calculations and briefly explain your conclusion. Do you have any recommendations for Jimmy?
Cash $1,000.00 Accounts receivable Marketable securities Delivery vehicles Equipment Goodwill 8,000.00 14,000.00 16,000.00 18,000.00 36,000.00 $93,000.00 -8,000.00 $85,000.00 Accounts payable Net fair market valueStep by Step Solution
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