Susan owns a non depreciable capital asset that originally cost $40,000 and is now worth $160,000 She transfers the asset to a corporation receiving as payment debt of $10,000, preferred shares of $20,000, and common shares of $130,000 Susan and the corporation will elect under Section 85 to avoid ...

Susan and the corporation should jointly elect a transfer price equal to the tax value of the asset ...

Susan owns a non-depreciable capital asset that originally cost $40,000 and is now worth $160,000. She transfers

Question:

Susan owns a non-depreciable capital asset that originally cost $40,000 and is now worth $160,000. She transfers the asset to a receiving as payment debt of $10,000, preferred shares of $20,000, and common shares of $130,000. Susan and the will elect under Section 85 to avoid paying tax on the transfer.
Determine the appropriate transfer price under Section 85. Determine the ACB and PUC for the preferred shares and common shares received as consideration. Income tax reference: ITA 85(1), (2.1).
Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may...