Brynn Costello owns all of the common shares of Fresh Horizons Inc., 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.Brynn would like to retire soon, and Brynn's only child Emory has expressed interest in taking over the business.Emory does not have a lot of disposable income at this time, and as such, a Section 86 reorganization of share capital has been recommended to Brynn.Brynn's common shares will be converted to preferred shares, redeemable for $150,000.Emory 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 for Brynn, indicating the ACB and the PUC of the new preferred shares.

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The Answer of Brynn Costello owns all of the common shares of Fresh Horizons Inc., 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.Brynn would like to retire soon, and Brynn's only child Emory has expressed interest in taking over the business.Emory does not have a lot of disposable income at this time, and as such, a Section 86 reorganization of share capital has been recommended to Brynn.Brynn's common shares will be converted to preferred shares, redeemable for $150,000.Emory 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 for Brynn, indicating the ACB and the PUC of the new preferred shares.

Brynn Costello Owns All of the Common Shares of Fresh