Ms. Takase is the sole shareholder of Takase Ltd. She owns 2,500 shares with a PUC and adjusted cost base of $400,000, and a fair market value of $1,000,000. Giant Holdings Ltd. acquires these shares in return for 10,000 of its common shares, which are currently trading for $100 per share. The rollover is completed using ITA 85.1. The results of the transaction will be:

		Ms. Takase will report a capital gain of $600,000 as a result of her deemed disposition. The adjusted cost base of her new shares in Giant Holdings Ltd. will be nil.
		Ms. Takase will be deemed to have disposed of her Takase Ltd. shares for an amount equal to their adjusted cost base. There will not be a capital gain to report on this disposition.
		The shares of Giant Holdings Ltd. that Ms. Takase acquires will have a deemed adjusted cost base of $1,000,000, the greater of the fair market value and the PUC of the Takase Ltd. shares. There will not be a capital gain to report on this disposition.
		The shares of Giant Holdings Ltd. that Ms. Takase acquires will have a deemed PUC of $1,000,000. She will report a capital gain on the disposition of $600,000.