On January 1, 2016, Chipper Ltd. acquired 100 percent of the outstanding shares of Intell Inc. at a cost of $1,800,000. At this point in time, the fair market value of Intell's identifiable net assets was $1,275,000, including $405,000 for the Land. The tax values of the net assets at that time totalled $615,000.
On December 31, 2020, there is a winding-up of Intell Inc. under the provisions of ITA 88(1). Intell Inc. has paid no dividends since its acquisition by Chipper Ltd. On December 31, 2020, the condensed Balance Sheet of Intell Inc. is as follows: Determine the tax values that will be recorded for Intell Inc.'s assets after they have been incorporated into the records of Chipper Ltd.

Question

On January 1, 2016, Chipper Ltd. acquired 100 percent of the outstanding shares of Intell Inc. at a cost of $1,800,000. At this point in time, the fair market value of Intell's identifiable net assets was $1,275,000, including $405,000 for the Land. The tax values of the net assets at that time totalled $615,000.
On December 31, 2020, there is a winding-up of Intell Inc. under the provisions of ITA 88(1). Intell Inc. has paid no dividends since its acquisition by Chipper Ltd. On December 31, 2020, the condensed Balance Sheet of Intell Inc. is as follows:  Determine the tax values that will be recorded for Intell Inc.'s assets after they have been incorporated into the records of Chipper Ltd.

Quizplus · Accepted Answer

The Answer of On January 1, 2016, Chipper Ltd. acquired 100 percent of the outstanding shares of Intell Inc. at a cost of $1,800,000. At this point in time, the fair market value of Intell's identifiable net assets was $1,275,000, including $405,000 for the Land. The tax values of the net assets at that time totalled $615,000.
On December 31, 2020, there is a winding-up of Intell Inc. under the provisions of ITA 88(1). Intell Inc. has paid no dividends since its acquisition by Chipper Ltd. On December 31, 2020, the condensed Balance Sheet of Intell Inc. is as follows:  Determine the tax values that will be recorded for Intell Inc.'s assets after they have been incorporated into the records of Chipper Ltd.