Barry Hicks Owns a Building with a Capital Cost of $200,000

question 40

Multiple Choice

Barry Hicks owns a building with a capital cost of $200,000, a UCC balance of $150,000, and a fair market value of $600,000.This property is transferred to a corporation under the provisions of ITA 85(1) .The corporation assumes the $50,000 mortgage on the build- ing.In return for the building, Barry receives a promissory note for $40,000 and preferred shares with a fair market value of $510,000.If Barry elects a value that will maximize tax deferral, the adjusted cost base of the preferred shares is:

• A)Nil.
• B)$60,000.
• C)$110,000.
• D)$600,000.

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Definitions:

Decoding

The process of interpreting or understanding messages or information received, often used in communication theory.

Fields of Experience

The varied backgrounds, knowledge, perceptions, and attitudes that individuals bring to a communication context, influencing how messages are understood.

Communication Process

The series of steps through which a message is transmitted from a sender to a receiver, involving encoding, channel selection, decoding, and feedback.

Encoding

The process of converting information into a particular format for efficient communication, processing, or storage.