Pat Middleton 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 transfer. Determine the appropriate transfer price under Section 85. Determine the cost of the asset for the corporation, and the ACB and PUC for the preferred shares received as consideration.
Pat Middleton 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 transfer. Determine the appropriate transfer price under Section 85. Determine the cost of the asset for the corporation, and the ACB and PUC for the preferred shares received as consideration.
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
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Pat Middleton owns a non-
Determine the appropriate transfer price under Section 85. Determine the cost of the asset for the corporation, and the ACB and PUC for the preferred shares received as consideration.
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