Natalie Bushkin's unincorporated business has land with a fair market value of $322,000 and an adjusted cost base of $147,000. In addition, the business has inventories with a fair market value of $23,000 and a tax cost of $25,000. She intends to transfer these assets to a new corporation, taking back $160,000 in cash for the land and $23,000 in cash for the inventories. If she uses Section 85(1)for the transfer, what is the possible range of values that can be elected for the two properties? If, in each case, she elects the lowest possible value, what are the tax consequences for Natalie?

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The Answer of Natalie Bushkin's unincorporated business has land with a fair market value of $322,000 and an adjusted cost base of $147,000. In addition, the business has inventories with a fair market value of $23,000 and a tax cost of $25,000. She intends to transfer these assets to a new corporation, taking back $160,000 in cash for the land and $23,000 in cash for the inventories. If she uses Section 85(1)for the transfer, what is the possible range of values that can be elected for the two properties? If, in each case, she elects the lowest possible value, what are the tax consequences for Natalie?

Natalie Bushkin's Unincorporated Business Has Land with a Fair Market