View the information about incorporation.

View the list of business assets.

Ms$.$ Hayward has only authorized the use of ITA $85(1)$ with respect to specific properties if there is an income tax advantage in doing so$.$

Read the requirements.

Requirement A$.$ Indicate which properties should be sold to the new company utilizing ITA $85(1).($Select all that apply.$)$

A$.$ Building

B$.$ Accounts receivable

C$.$ Land

D$.$ Inventories

E$.$ Cash

F$.$ Equipment

G$.$ Goodwill

Required

A$.$ Indicate which properties should be sold to the new company utilizing

ITA $85(1).$

B$.$ Given that Ms$.$ Hayward wishes to minimize any income tax consequences of

the incorporation, determine the minimum elected amount to be chosen for

each eligible property.

C$.$ Describe the income tax consequences for both Ms$.$ Hayward and Hayward

Inc. if the minimum elected amount is chosen for each eligible property.

Incorporation

During much of this period, you have constantly reminded her that there would be

many advantages associated with incorporation, including the availability of the

small business deduction. In the past, she has indicated that she has all of the

money she requires and simply cannot be bothered with the complications

associated with incorporating her business. However, in late $2023,$ you have finally

convinced her that incorporation may be the best course of action.

She indicates that she is still concerned with respect to income tax that might arise

on the incorporation of her business. In response, you have indicated that

ITA $85(1)$ provides a method that will result in little or no income tax. As

a consequence, she agrees to proceed with incorporation. She will be the only

shareholder of the newly incorporated CCPC Hayward Inc.

List of business assets

The incorporation of the business will take place on October $1,2023.$

You have prepared the below list of business properties that will be

transferred along with their current FMV and relevant tax cost.

The tax cost shown for the building, equipment, and goodwill is the

UCC immediately prior to the sale of the business properties to the

new corporation. Since the goodwill was not purchased and was

internally generated, there is nil cost and, therefore, a nil UCC balance

in Class $14\mathrm{.}1.$