In early 2020, Carol Martin sells all of her common shares in Martin Ltd., an eligible small business corporation. She had owned the shares for 10 years. The shares had an adjusted cost base of $895,000 and were sold for proceeds of disposition of $985,000. Using these proceeds, she made two investments in other eligible small business corporations:
• She used $200,000 of the proceeds to invest in Barby Ltd.
• She used $600,000 of the proceeds to invest in Ken Inc.
The remaining proceeds remained in her savings account at the end of 2020. How much of the capital gain arising on the sale of the Martin Ltd. shares can be deferred by the investments in Barby and Ken? If the maximum deferral is elected, what will be the adjusted cost base of these two investments?

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The Answer of In early 2020, Carol Martin sells all of her common shares in Martin Ltd., an eligible small business corporation. She had owned the shares for 10 years. The shares had an adjusted cost base of $895,000 and were sold for proceeds of disposition of $985,000. Using these proceeds, she made two investments in other eligible small business corporations:
• She used $200,000 of the proceeds to invest in Barby Ltd.
• She used $600,000 of the proceeds to invest in Ken Inc.
The remaining proceeds remained in her savings account at the end of 2020. How much of the capital gain arising on the sale of the Martin Ltd. shares can be deferred by the investments in Barby and Ken? If the maximum deferral is elected, what will be the adjusted cost base of these two investments?

In Early 2020, Carol Martin Sells All of Her Common