Ms. Lambda, a Canadian resident, owned all of the common shares of Lambda Enterprises Ltd. (LEL). The shares have a paid-up capital value and a cost of $75,000. She transferred these shares under section 85 to a holding company, Holdco Inc., which her two Canadian-resident adult children control, at a time when the value of the LEL shares was $800,000. As consideration for the LEL shares transferred, she received from Holdco Inc. a note with a principal amount of $500,000 and preferred shares with a fair market value of $300,000, such that an elected amount of $500,000 was possible under section 85. Ms. Lambda intended to offset all of the resultant $425,000 of capital gain with her available QSBCS capital gains exemption.

Which one of the following statements is false?

(a) The PUC of the Holdco Inc. preferred shares is nil.
(b) Ms. Lambda is deemed to receive a dividend of $425,000 from Holdco Inc.
(c) Ms. Lambda’s ACB of the Holdco Inc. preferred shares is nil.
(d) Ms. Lambda is deemed to receive proceeds of disposition of $500,000 for the LEL shares.