Determine the minimum elected transfer price and the PUC of the preferred shares from the above transaction under Section 85 of Income Tax Act. b) Determine the tax consequences for Linda, if any. c) Explain to Linda, what she could have done anything differently to avoid any immediate tax implications (if any) from this transaction.
Linda has operated a proprietorship for five years. Linda owns equipment that originally cost $300,000, has an Undepreciated Capital Cost (UCC) of $160,000 and Fair Market Value (FMV) of $210,000.
Linda would like to transfer the property to a corporation using the Roll-over provision for a cash payment. As a result, Linda and the corporation made a Section 85 election with respect to the transfer and Linda received $180,000 cash and
Required:
a) Determine the minimum elected transfer price and the PUC of the preferred shares from the above transaction under Section 85 of Income Tax Act.
b) Determine the tax consequences for Linda, if any.
c) Explain to Linda, what she could have done anything differently to avoid any immediate tax implications (if any) from this transaction.
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