Problem #$5$

During $2018,$ Mrs$.$ Jeanne Keanings uses ITA $85$ to transfer non$-$depreciable property to

a CCPC in which she owns $100$ percent of the shares. The adjusted cost base of the property is

$$136,000$ and she believes that it has a fair market value of $$283,000.$ In consideration for this

property, Mrs$.$ Keanings receives a note for $$283,000$ and preferred stock with a nominal value.

In $2019$ Jeanne is reassessed on the basis that the fair market value of the transferred property was

only $$224,000.$ She accepts the reassessment without objection.

Required: Describe the tax consequences of the transfer and the reassessment. Indicate the

adjusted cost base of the consideration, and the adjusted cost base and the PUC of the preferred

shares after the reassessment.