View the step-by-step solution to:

Eric Lehnserr owns 100 percent of Magnus Products Ltd. The shares were originally issued in 1982 for $20,000. In 1986, they were acquired by Eric's...

Eric Lehnserr owns 100 percent of Magnus Products Ltd. The shares were originally issued in 1982 for $20,000. In 1986, they were acquired by Eric's father for $25,000. In 2002, Eric's father died and left the shares to Eric. At that time, they were deemed to have been disposed of for $100,000. On the terminal return for Eric's father, a capital gain of $75,000 was reported, and tax was paid on the taxable capital gain of $37,500. Eric wishes to transfer the shares, now valued at $250,000, to a holding corporation owned by himself, electing under Section 85(1) of the Income Tax Act. Magnus Products Ltd. has never paid dividends of any kind.

What is the minimum possible elected amount under Section 85(1), ignoring the impact of consideration received?

Top Answer

Section 85(1) election of the Income Tax Act makes it possible to transfer property... View the full answer

Sign up to view the full answer

Why Join Course Hero?

Course Hero has all the homework and study help you need to succeed! We’ve got course-specific notes, study guides, and practice tests along with expert tutors.

-

Educational Resources
  • -

    Study Documents

    Find the best study resources around, tagged to your specific courses. Share your own to gain free Course Hero access.

    Browse Documents
  • -

    Question & Answers

    Get one-on-one homework help from our expert tutors—available online 24/7. Ask your own questions or browse existing Q&A threads. Satisfaction guaranteed!

    Ask a Question
Ask a homework question - tutors are online