Pat owns a non depreciable capital asset that originally cost $20,000 and is now worth $80,000 Pat transfers the asset to a corporation, receiving as payment debt of $60,000 and preferred shares with a value of $20,000 Pat and the corporation will elect under Section 85 to avoid paying tax on the t...

The elected amount can never be less that the nonshare consideration received ...

Pat owns a non-depreciable capital asset that originally cost $20,000 and is now worth $80,000. Pat transfers

Question:

Pat owns a non-depreciable capital asset that originally cost $20,000 and is now worth $80,000. Pat transfers the asset to a receiving as payment debt of $60,000 and preferred shares with a value of $20,000. Pat and the will elect under Section 85 to avoid paying tax on the transfer.
Determine the appropriate transfer price under Section 85. Determine the cost of the asset for the and the ACB and PUC for the preferred 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...