Nat owns common shares in Nat’s Trading Corporation Limited with the following values:

Elaine’s Pubco Ltd., a widely-held Canadian public company, has acquired all of the common shares of Nat’s Trading Corporation Limited owned by Nat. In exchange for these common shares, Elaine’s Pubco Ltd. has issued its common shares for a total fair market value of $950,000, representing 10% of the fair market value of all of its shares.

Nat would like to defer the realization of the capital gain accrued on his shares.

REQUIRED
What are the tax consequences of applying the share-for-share exchange  rollover in this case?

Transcribed Image Text:

FMV ACB PUC $950,000 100,000 10,000