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.