Jaime Molina has just met with you about incorporating their sole proprietorship business. Jaime is a Canadian resident and has provided you some information about their unincorporated photography business and the assets it owns.

Asset	Fair market value	ACB / Capital cost	UCC
Land	$195,000	$140,000	N/A
Building	495,000	485,000	$470,000
Marketable securities	85,000	50,000	N/A
Equipment	50,000	65,000	40,000

Required:

1) What is a section 85 transfer and what is the advantage to Jaime of using it?

2) For each of the assets listed above:

a. Assess whether they qualify for a transfer under section 85.

b. Determine the minimum possible elected amounts.

c. Compute the effects on income, if any.

d. Indicate the maximum boot that can be taken back and not add any income.

3) Determine what would happen if the boot taken back on the land was $160,000.