(The Incorporation of a Business and Redemption of Shares) Ms. Martha Fleck carries on a business as a sole proprietor that operates out of leased premises. On December 31. 2020, the tax costs and FMV of property used in the business is as follows.

	Tax cost	FMV
Accounts receivable	132000	127500
Inventory	261000	312000
Equipment (capital cost = $420,000)	351000	475500
Goodwill	nil	525000
Total	744000	1440000
Liabilities	(142500)	(142500)
Net	601500	1297500

All of the above properties of the business will be sold to Rollex Inc., a newly incorporated com- pany. The accounts receivable will be sold using a joint election under ITA 22. A joint election under ITA 85(1) will be filed with respect to the inventory, equipment, and good- will. The corporation will pay consideration of $1,312,500 ($1,440,000- $127,500), consisting of new debt of $112,500, assumption of the existing liabilities of $142, 500, preferred shares with a FMV of $337,500, and common shares with a FMV of $720,000. The new corporation does not have a balance in its GRIP account in any taxation year. Ms. Fleck wishes to incorporate her business in a manner that minimizes any income tax result- ing from the sale. Required: Ignore the lifetime capital gains deduction in your solution. A. Do you agree with the decision to file an election under ITA 22 with respect to the accounts receivable? Explain your conclusion and determine the income tax consequences of this decision, B. Given that Ms. Fleck wishes to minimize income tax on the sale, indicate the amounts that should be elected for each of the inventory, equipment, and goodwill. C. Determine the ACB of all consideration received by Ms. Fleck, D. Determine the PUC of the share consideration. E. Determine the income tax consequences to Ms. Fleck if the preferred and common shares issued as consideration were redeemed in January 2021 at their FMV determined at the time of sale.