Rolls & Estate Planning Flashcards
What is the point of a section 85 rollover?
Asset roll
make sure that value in = value out so that the tax is deferred
Is section 85 considered a roll?
Yes
Can section 85 be used for an estate freeze?
yes
Do you need to elect to do a section 85 rollover? If yes, what form?
Yes, you must elect. T2057
When would you want to use a section 85 rollover?
When you want to move assets into a company that exists already
OR when you’re a sole proprietor whose incorporating
*usually triggers a c/g and increased cost base, but the 85 roll allows it to occur on a tax free basis (deferred)
What is the point of a section 85.1 rollover?
Share for share exchange
For public companies to acquire target corp
Is section 85.1 considered a roll?
Yes
Can you use section 85.1 to do an estate freeze?
No
Do you need to elect to do a section 85.1 rollover? If yes, what form is needed?
No, it automatically applies unless you opt out.
When would you use a section 85.1 rollover?
Public companies use it to acquire target corps.
What is the point of a section 86.1 rollover?
Share exchange for estate freeze situations
freeze the value of the company in your shares & exchange for new ones
Is section 86.1 considered a rollover?
Yes
Can you use section 86.1 to do an estate freeze?
Yes
Do you need to elect to use a section 86.1 rollover? If yes, what form do you need?
No, it automatically applies unless you opt out.
When would you use a section 86.1 rollover?
Section 86.1 allows for the exchange of shares within a corp.
Corps are permitted to exchange all of the class of shares for an entirely different class of shares through 86.1 w/out incurring a tax liability for the corp/SH
What is the point of section 51 rollovers?
Used when a taxpayer exchanges shares for diff shares in the corp.
Is section 51 a rollover?
Yes
Can you use section 51 to do an estate freeze?
Yes
Do you need to elect to do a section 51 rollover?
No, it automatically applies unless you opt out?
When do you use a section 51 rollover?
Section 51 is a true exchange of shares
(unles 86.1 & 85 which are a redemption of old shares + acquisition of new shares)
Which rollover require an election to perform?
Section 85 (T2057)
*but ITA 87 & ITA 88.1 require paperwork to be filed
What is the point of an amalgamation using ITA 87?
An amalgamation occurs when 2+ corps (predecessor corps) combine their businesses to form a NEW successor corp.
Is ITA 87 amalgamation a rollover?
Yes
Can you use ITA 87 amalgamation to do an estate freeze?
No
