Ben is incorporating his proprietorship and would like to transfer the following capital assets to the new corporation. Ben will also transfer his inventory. The inventory originally cost $25,000 and has a fair market value $30,000.
Ben wishes to defer all gains at this time so has elected to use a section 85 rollover. He will receive the maximum note receivable possible and the remainder of the transfer in preferred shares.
Required:

Question

Ben is incorporating his proprietorship and would like to transfer the following capital assets to the new corporation.  Ben will also transfer his inventory. The inventory originally cost $25,000 and has a fair market value $30,000.
Ben wishes to defer all gains at this time so has elected to use a section 85 rollover. He will receive the maximum note receivable possible and the remainder of the transfer in preferred shares.
Required:

Quizplus · Accepted Answer

The Answer is

The equipment would not benefit from a section 85 rollover since the elected value and fair market value would be equal.

The equipment would not benefit from a section 85 rollover since the elected value and fair market value would be equal.

Ben Is Incorporating His Proprietorship and Would Like to Transfer