Mr. Lawson, who is a resident of the United States, owns a number of rental properties in various cities throughout Canada. Having reached age 65, he would like to see these properties transferred to his children. However, he does not have sufficient cash to pay the taxes that would accrue if he simply gave the property to his children. He is somewhat aware of the provisions of Section 85 of the Canadian Income Tax Act, and is considering transferring the properties to a U.S. corporation in which his children would hold the residual equity shares. Advise Mr. Lawson as to the soundness of his plan.

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The Answer of Mr. Lawson, who is a resident of the United States, owns a number of rental properties in various cities throughout Canada. Having reached age 65, he would like to see these properties transferred to his children. However, he does not have sufficient cash to pay the taxes that would accrue if he simply gave the property to his children. He is somewhat aware of the provisions of Section 85 of the Canadian Income Tax Act, and is considering transferring the properties to a U.S. corporation in which his children would hold the residual equity shares. Advise Mr. Lawson as to the soundness of his plan.

Mr Lawson, Who Is a Resident of the United States