Kevin Ali has decided to incorporate his retailing business. He plans to transfer the assets of the business to KA Inc., a corporation that is wholly owned by him. Kevin will file an election under section 85 of the Income Tax Act. In exchange for the transfer of his business assets, Kevin would like to receive the maximum amount of non-share consideration while deferring the recognition of any income.

The assets of the retailing business are as follows:

Required: Discuss how Kevin can transfer his retailing business to KA Inc. under section 85. Your response should include a computation of the maximum amount of non-share consideration he may receive and the fair market, ACB and PUC of the shares issued to him.

If there are any assets that cannot be transferred to the corporation under section 85, clearly indicate why this is the case.

Inventory Land Building Class 8 Equipment Goodwill Total \begin{tabular}{rrr} FMV & COST & UCC \\ $300,000 & $110,000 & \\ 90,000 & 30,000 & \\ 190,000 & 150,000 & $80,000 \\ 40,000 & 150,000 & 65,000 \\ 80,000 & 0 & 0 \\ \hline$700,000 & $440,000 & $145,000 \\ \hline \end{tabular}