Chapter 10

Question 1

What are the 3 non-eligible property types excluded from s.85?

Answer 1

1. Inventory real estate
2. Depreciable property w/ terminal loss (UCC > FMV, only asset left in its class)
3. Cash

Question 2

Would it be recommended to rollover an asset with an accrued loss (FMV < Cost)?

Answer 2

No because s.85 is a mechanism in place to defer paying tax on capital gains.

Question 3

What is s.22?

Answer 3

Section 22 applies to a business selling their AR. The business is able to deduct any loss on sale, computed as the difference between POD and the face value.

Question 4

In what order should you allocate the elected amount?

Answer 4

1. BOOT
2. Preferred shares
3. Common shares

Question 5

What election amount should you always choose to transfer an asset at?

Answer 5

ACB ($0 TCG)

Question 6

What is the PUC of newly elected shares equal to?

Answer 6

PUC = Elected amount - FMV BOOT

Question 7

What must you always check after completing a s.85 rollover?

Answer 7

FMV brought in = FMV taken out

Question 8

What is the maximum amount of BOOT you can take out?

Answer 8

Elected amount