(Solution) - Ms Kline a resident of Canada is the sole shareholder -(2025 Original AI-Free Solution)

Paper Details

Ms. Kline, a resident of Canada, is the sole shareholder of KI Inc. She plans to transfer four assets, which she owns, to KI Inc. in exchange for cash and preferred shares of KI Inc. She wishes to receive the maximum amount in cash that she can receive and still defer the recognition of income for tax purposes on the transfer of the assets. Ms. Kline and KI Inc. will jointly make a Section 85 election for each of the assets. The following is the details of the assets:

Required:
1. For each of the four assets individually, state the amount that should be elected as proceeds under Section 85 of the Income Tax Act.
2. For each of the four assets individually, state the amount of cash and the value of the preferred shares that Ms. Kline should accept as payment for the assets.