QUESTION ONE

Stewart Mueller, a Canadian resident, is considering selling his shares of AA Ltd$.,$ which operates a printing business in

Canada. He hopes that he will be able to use the capital gains deduction to shelter the gain from tax. Stewart purchased his

shares of AA Ltd$.$ four years ago for $$1,000,000$ and he estimates that they are now worth $$2,000,000.$ Stewart owns $100\%$

of the company. The latest balance sheet for AA Ltd$.$ is below.

The value of the current assets approximates their fair market value. The business premises $($land and building$)$ are

estimated to be worth $$1,600,000.$ The equipment is valued at $$80,000.$ The goodwill is estimated to be worth $$500,000.$

The relative values of the assets have remained consistent throughout the last two years.

Determine if AA Ltd$.$ is currently a qualified small business corporation.