For All The Contract Ame's, Re: Tools

[K2ventures]

When you ame's out there that went inc'd, and sold your tools to the inc'd company, how accurate were you with pricing? For example, a set of Snap-On 1/4" drive swivel sockets cost $250 from the truck, and I sold them to my company for $200. Do I need to be spot-on for a dollar figure?

 

Thanks

[sven]

You are supposed use Fair Market Value.

What that amounts to is anybody's guess.

 

Here's the word from CCRA:

Corporations

 

Good luck,

 

Sven

[Blackmac]

Corporation For income tax purposes, you can transfer personal property to a Canadian corporation for an elected amount.

 

This amount may be different from the fair market value (FMV) as long as you meet certain conditions. For more informaiton see IT291, Transfer of Property to a Corporation under Subsection 85(1), or IC76-19, Transfer of Property to a Corporation under Section 85.

 

If the elected amount is greater than the original purchase price, you must report the difference as a capital gain on your income tax and benefit return. For more information, see the Capital Gains guide.

 

K2ventures:

Fair market price or replacement cost can be used or actual cost if you have the receipts.

 

Unless you fully understand the tax implications of what you are allowed in an incorporating, I would suggest you get an accountant (it's a tax deduction, so basically no cost) who knows all the legal options and does your tax return.

 

Cheers, Don