Zeto, a resident of Canada, has owned 100% of the shares of Zeto’s Manufacturing Limited (ZML), a Canadian-controlled private corporation, since its incorporation 20 years ago. The corporation carries on a manufacturing business in Canada. He is presently considering the sale of his shares. The fair market value of the assets of ZML is comprised as follows;

The subsidiary, Zeto Wholesale Ltd. (ZWL), was incorporated by ZML 15 years ago to carry on a wholesaling business in Canada. The fair market value of its assets consists of the following:

REQUIRED

Determine whether the shares of ZML are qualified small business corporation shares at the present time.

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Active business assets Shares of 100%-owned subsidiary Investments FMV at present $200,000 250,000 50,000 $500,000 % 40 50 10 100 FMV throughout past 24 months $160,000 120,000 120,000 $400,000 % 40 30 30 100