Which of the Following Scenarios Would Be Most Appropriate for a Section

question 4

Multiple Choice

Which of the following scenarios would be most appropriate for a section 85 rollover?

• A)A corporation is selling its equipment to another corporation and does not wish to own shares in the other corporation.
• B)A corporation wishes to convert land owned by the company into a parking lot.
• C)A taxpayer wishes to transfer property worth $200,000, with an ACB of $90,000, to her corporation.
• D)A shareholder of a corporation wishes to transfer his vehicle to his corporation. The vehicle originally cost $20,000 and has a market value of $12,000.

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Definitions:

Supplies

Items used in the operation of a business that are consumed or not resalable, such as office supplies or manufacturing inputs.

Stockholders' Equity

The residual interest in the assets of a corporation after deducting liabilities, representing the ownership interest.

Recordable Transaction

A transaction that must be entered into the financial records of a company because it affects the financial position.

Cleaning Service

A business that provides cleaning and maintenance services for commercial or residential properties.