Mr. James Brooks owns 85% of the common shares of River Inc. His shares have an ACB of $410,000. The remaining common shares are owned by his 19 year old son and his shares have an ACB of $95,000. The corporation is a CCPC and its shares have a total FMV of $3,260,000 and PUC of $525,000. In 2023, Mr. Brooks exchanged all of his River Inc. common shares for cash of $630,000 and preferred shares that are redeemable for $1,680,000. This leaves his son with all remaining common shares. At this time, River Inc. has no balance in its GRIP account. 

Required:

A. Which ITA Section applies in this scenario? Explain. 

B. Determine the ACB and the PUC of the redeemable preferred shares. Indicate the amount, and type, of any income that will result from this transaction. Show your calculations. 

C. What are the tax consequences for Mr. Brook's and his son