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This question was created from SS_and_SSS_Chap_11_to_21(2018).pdf https://www.coursehero.com/file/39242702/SS-and-SSS-Chap-11-to-212018pdf/

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(ACB Of Consideration And PUC)
Jeremy Steel intends to transfer a tract of land to a new corporation. The land has an adjusted
cost base of $225,000 and a fair market value of $625,000. The transfer will be implemented
under the provisions of ITA 85 at an elected value of $225,000.
Mr. Steel is considering the following alternative consideration packages:
Alternative
One
Two
Three
Debt Of The New Corporation
$150,000
$175,000
$210,000
Preferred Shares
50,000
450,000
Nil
Common Shares
425,000
Nil
415,000
Total
$625,000
$625,000
$625,000
All of the amounts in the preceding table are fair market values.
Required:
A. For each of the three alternatives, determine the adjusted cost base of the individual items
of consideration received by Mr. Steel.
B. For each of the three alternatives, determine the legal stated capital and the Paid Up
Capital for the preferred and/or common shares issued.
SOLUTION available In printed and online Study Guide.

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