No Section 85.1 Section 85.

1 - Share for Share Exchange

Acquiror Co Shares

Checklist
Must be singles class of new share
No NSC or "boot"

Checklist
Dealing at Arms's Length
No Section 85 elections on exchanged shares
Acquiror Corp
(Purchaser)
Target Co
Shareholders
Target Corp Shares Assumptions
FMV 1,970,000
Checklist ACB -
1.) Taxable Canadian Corporatiom PUC 542,143
- Resident in Canada Yes Checklist

1.) Must not control

purchaser after the
exchange or own shares
with over 50% of the FMV
of the purchasing corps
Assumptions on Target Co Shares - Incorporated in Canada Yes oustanding shares
FMV 10,000 - Not exempt from Part 1 Tax Yes
PUC 5,000
ACB 5,000
Acquiror Corp. (Purchaser) Target Co Shareholder
Acquiror Corp Target Co Shareholder Section 85.1 Automatic No election!
FMV 10,000 POD = ACB -
ACB -5,000 Lesser of ACB -
5,000 - FMV immediately before the exchange 1,970,000 Capital Gain to Target Co Shareholders -
Capital Gain inclusion 50% - PUC immediately before exchange 542,143 Capital Gain inclusion 50%
Taxable Capital Gain 2,500 Taxable Capital Gain -
ACB 10,000 Choice 542,143
New Acquiror Corp Shares
ACB -

PUC
Legal Captial 1,970,000
PUC reduction (1,427,857)
542,143