Brian Snow Owns All of the Common Shares of Treeline

question 3

Essay

Brian Snow owns all of the common shares of Treeline Boots Ltd., a
Canadian-controlled private corporation. The shares have a fair market value of
$150,000, an ACB of $30,000, and a PUC of $5,000. Brian would like to retire soon, so he has offered the company to his son, Walter. Walter is young and does not have a lot of disposable income, and as such, a Section 86(1)
reorganization of share capital has been recommended to Brian. Brian's common shares will be converted to preferred shares, which are redeemable for $150,000. Walter will then purchase a new class of common shares at a nominal value.
Required:
Discuss the immediate tax consequences of the reorganization of share capital fo Brian, indicating the ACB and the PUC of the new preferred shares.

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Definitions:

Ethical Leadership

describes leading by demonstrating ethical behavior, influencing others to behave ethically through actions and decisions.

Zero-Tolerance Policy

A policy that enforces strict punishment for infractions of a stated rule, with the intention of eliminating undesirable behaviors.

Ethical Intensity

The degree of importance or impact that an ethical issue has, based on its potential outcomes and the number of people affected.

Social Security Benefits

Government provided financial benefits given to individuals due to retirement, disability, or death, for the purpose of income support.