Top Section 85 Tax Planning Strategies for Business Owners Looking to Defer Capital Gains

Section 85 tax planning is essential for businesses looking to defer capital gains in Canada, allowing owners to transfer appreciated assets corporation while minimizing immediate tax liability. Gondaliya CPA specializes in Section 85 rollovers and other corporate restructuring strategies to provide effective tax deferral Canada options and capital gains tax planning Canada tailored for your business needs.

Quick Summary

The elected amount is the lever. Set it at cost and you defer everything; set it higher and you realise gain now, which can be the better answer where losses or exemptions are available. Please note that boot above the elected amount is taxed straight away, and that Form T2057 must be filed by the earliest return deadline of any party.

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The Numbers That Matter

Section 85 Rollover: Definition and Context

A Section 85 rollover lets Canadian business owners delay paying capital gains taxes when they move assets into a corporation. This tax planning tool works under the Income Tax Act. It’s useful for incorporated small and medium-sized businesses (SMBs) aiming to improve their corporate tax planning. Owners can manage their tax bills better while moving appreciated assets smoothly.

The main perk is tax deferral on capital gains until you sell or get rid of the assets. This means owners avoid paying taxes right away, which helps keep cash flowing. That extra cash can then support company growth or other plans.

Key Features and Benefits of Section 85 Tax Planning

Section 85 tax planning has some key points that attract Canadian business owners:

• Capital Gains Deferral: Owners can put off paying capital gains taxes by choosing the right amount when they transfer assets.
• Elected Amount Under Income Tax Act: The elected amount sets how much gain gets deferred. Knowing this rule helps with smart planning.
• Optimizing Tax Outcomes for Incorporated SMBs in Ontario: Picking which assets to transfer can lower immediate tax bills and boost future advantages.
• Flexibility Structuring Consideration Shares Boot: Owners can decide how to structure shares received, including getting boot—cash or other property during the deal—which adds flexibility.

Together, these features help corporations handle money better by focusing less on taxes now and more on growing the business.

When and Why to Use Section 85 Rollovers

It’s good to know when and why to use Section 85 rollovers during corporate changes:

• Incorporating Sole Proprietorships or Partnerships in Canada: Moving from personal ownership to a corporation often means transferring assets, where delaying taxes helps.
• Estate Freezes & Succession Planning in Canada: Owners wanting to pass the business down might use rollovers to freeze estate value so gains grow outside their taxable estate.
• Corporate Reorganizations & Business Restructuring in Canada: Big changes like mergers or restructuring benefit from rollovers since they simplify the process and ease tax impacts.
• Preparing Sale & Bringing New Investors Onboard: If selling or adding investors, rollovers reduce upfront capital gains costs, making deals cleaner.

Using Section 85 at the right times helps owners stay in good financial shape while handling tricky business shifts.

Eligible Property for Section 85 Transfers

Section 85 tax planning helps business owners delay paying capital gains tax. You transfer certain property to a corporation and avoid immediate tax. Knowing which assets count is key to good corporate tax planning. It also helps you get the most from Section 85 capital gains deferral.

Types of Property Eligible (Capital Property, Eligible Capital Property, Inventory)

Here’s what counts as eligible property under Section 85:

• Capital property: This includes things like real estate, shares in other companies, goodwill under Class 14.1, patents, trademarks, and some intangible stuff.
• Eligible capital property: Intangible assets such as goodwill or customer lists fit here. These matter a lot in service businesses.
• Inventory: Normally, inventory can’t be rolled over because it’s trading stock. But subsection 22 lets you make an election to treat some inventory transfers like rollovers if rules are met.

To benefit from Section 85 deferrals, the assets must match what the Income Tax Act calls “eligible property.”

Distinctions Between Eligible and Non-Eligible Assets

Not every asset qualifies for Section 85 rollovers. Here’s a quick breakdown:

Knowing these differences helps you stay compliant and make smart tax decisions.

How Section 85 Elections Work: Step-by-Step Process

You must do the election process right to make Section 85 tax planning work well. Each step follows CRA rules.

Determining Fair Market Value (FMV) of Transferred Property

FMV sets the base for deferred gains calculation. It means what a willing buyer would pay a willing seller at arm’s length on transfer day. Use professional appraisals or recent sales to back up your FMV choice — audits check this closely.

Choosing the Appropriate Elected Amount Within Safe Ranges

The elected amount is what the transferor treats as proceeds from disposing of the asset. It must fall between set floors and ceilings:

• The minimum is usually cost base or undepreciated capital cost (UCC), depending on how much gain you want to defer.
• The max can’t exceed FMV.

If you pick an amount above cost, some gain shows now but you might use losses or exemptions wisely. If you choose UCC, you get max deferral but risk recapture on depreciable assets.

The elected amount should balance paying less tax now versus what happens later in the corporation.

Structuring Share and Non-Share Consideration (Boot)

When you transfer property, the transferor gets shares plus sometimes cash or debt relief called boot:

• If boot goes beyond limits, part of the gain triggers immediately.
• You can use promissory notes instead of cash if done right to avoid extra taxes.

Plan this carefully to avoid unexpected taxable boot while meeting cash needs.

Filing Requirements Including Form T2057 and Deadlines

Form T2057 makes your election official under subsection 85(1). Here are key points:

• File by the earliest return deadline among those involved — April 30 after calendar year-end for individuals; six months after fiscal year-end for corporations.
• Late filings bring penalties capped per return unless you have a good excuse.

Fill Form T2057 accurately with elected amounts, details on shares issued, and paid-up capital changes so your election counts.

Importance of Accurate Documentation and Compliance

Good records protect you from audits and keep you within CRA rules on late-election penalties and record keeping.

Key tips:

• Keep copies of all agreements showing asset details, values used in elections, share issuances, and filed Forms T2057.
• Penalties apply if elections are late without valid reasons — fines have caps but act fast anyway.

Staying organized with your paperwork lowers risk and keeps your Section 85 rollovers smooth in any corporate restructure.

Common Pitfalls in Section 85 Rollovers and How to Avoid Them

Section 85 tax planning can help you defer capital gains, but mistakes can wipe out those benefits. Knowing the common slip-ups helps keep your corporate tax planning on track across Canada.

A big error is picking the wrong Section 85 elected amount. This number must sit between set floor and ceiling limits depending on the asset. Choose below the floor or above the fair market value (FMV), and you risk immediate taxable gains or CRA reassessments. Getting a solid valuation that follows CRA rules stops this problem.

Watch out for boot consideration too. This means any non-share payment the transferor gets. If boot is too high compared to the elected amount, part of your gain becomes taxable right away. You can avoid this by using promissory notes as boot, but keep them within allowed limits so you don’t trigger tax while still meeting cash needs.

Another trap is forgetting to issue at least one share of the transferee company to the transferor. This breaks subsection 85(1)(e.2) and voids your rollover election. Make sure all share issuances are properly documented and filed with corporate registries to dodge this mistake.

Also, don’t miss filing Form T2057 on time. You must submit it by the earliest tax return deadline of all parties involved that year. Late filings bring penalties capped per taxpayer. Having a clear schedule for submissions helps prevent these costly delays.

Be careful with anti-avoidance rules like section 84.1 deemed dividends on transfers between related parties. These could cause dividend treatment instead of capital gains deferral if not planned correctly. Legal advice early on will spot these risks before they cause trouble.

Tracking paid-up capital (PUC) and adjusted cost base (ACB) after transfers matters too. Poor recordkeeping here can lead to wrong gain calculations or missed exemptions later on. Keeping detailed records aligns with CRA rules and makes future dealings smoother.

To wrap up, avoiding these common Section 85 pitfalls means staying sharp on valuation, boot setup, timely filings, legal compliance, anti-avoidance awareness, and recordkeeping—all key parts of a good Section 85 capital gains deferral plan.

Strategic Applications of Section 85 in Corporate Tax Planning

Section 85 rollovers fit well into many corporate tax plans like estate freezes, holding company setups, business succession moves, and ways to defer capital gains across Canada.

One smart use is through estate freeze techniques. Here, owners swap appreciated assets for fixed-value preferred shares while growth shares go to heirs or trusts. This freezes current value for older shareholders but lets future growth happen outside their hands—cutting taxes at succession without triggering immediate sales.

Using a holding company structure also makes sense. It protects assets from creditors and separates operating business assets from investments like real estate. Moving appreciated assets into a holding company via Section 85 lets you take steps needed to qualify for lifetime capital gains exemption when selling later.

People often mix Section 85 with other elections under Sections 22 (inventory), 84.1 (surplus stripping), and others to time their capital gains deferrals better. Combining these tools reduces spikes in taxable income during business restructures—a big help especially for small businesses in places like Toronto.

Business succession planning leans heavily on Section 85 too when ownership shifts inside or outside a family or group. Pre-sale reorganizations keep accrued gains inside corporations until final sales happen—pushing personal taxes down the road while keeping shareholders aligned over time.

These strategies require careful work around elected amounts and clauses that adjust prices if FMV changes after transfer. Working with legal counsel ensures share classes support freeze plans without tripping section 84.1 dividend risks.

At Gondaliya CPA, we customize our approach based on what each client wants: whether that’s holding off tax hits fully; passing wealth through generations; protecting goodwill owned by medical pros; or managing real estate within complex group setups across Ontario regions like Etobicoke and Mississauga.

Tax Implications Post-Rollover for Transferor and Corporation

A Section 85 rollover lets a transferor push off paying capital gains tax. They pick an amount between the original cost and the fair market value (FMV) of property they move into a corporation. This deferral sticks in the adjusted cost base (ACB) of the shares they get, so tax only hits when they sell or give up those shares.

For the transferor, no immediate capital gain shows up if they pick amounts right within set limits^[1]. But if they get extra cash or “boot” over that chosen amount, that part becomes taxable^[2]. The ACB in their new shares equals the elected amount plus any money paid.

The corporation sets a cost basis equal to that elected number for each asset it gets^[3]. This stops capital gains or recapture until the asset is actually sold. Depreciable assets keep their undepreciated capital cost (UCC), so depreciation deductions remain intact under corporate tax planning.

Tax deferral Canada plans using Section 85 need close watch on paid-up capital (PUC) and share classes issued during rollovers. Missing deadlines like filing Form T2057 can bring penalties and kill deferral benefits^[4].

In short, after the rollover, both parties must keep clear records. Doing so helps reduce taxes now without locking future moves.

Comparison of Section 85 Rollover vs Section 86 Reorganization: Which Defers Gains Better?

So, if you want to defer gains from assets like equipment or land moved into a corporation, Section 85 gives better control over timing and amount through elected values. But if you’re just swapping shares within related companies, Section 86 is simpler but covers less ground beyond equity swaps^[6].

Both rules play roles in corporate tax planning to lower immediate taxes while keeping room to grow.

When Not to Use Section 85 for Asset Transfer

Section 85 might not work well when:

• Assets include excluded items like inventory held mainly for resale or some financial instruments banned by CRA rules^[7].
• You need cash fast that goes beyond what boot allows without tax hitting.
• Shareholders can’t handle tricky compliance steps like exact valuations or filing T2057 on time.
• Transfers happen between related parties where anti-avoidance rules like section 84.1 may call payments deemed dividends, triggering extra taxes^[8].
• The plan involves simple share sales better done directly despite upfront tax because less paperwork is needed.

In these cases, other corporate tax planning options might fit better. Get advice suited for Ontario businesses aiming at smart tax deferrals across Canada.

Footnotes

1. CRA – Elected Amount Rules. Accessed June 2024
2. Income Tax Act s.85(1)(e). Accessed June 2024
3. CRA – Cost Basis Post-Rollover. Accessed June 2024
4. Form T2057 Filing Requirements. Accessed June 2024
5. Department Of Justice – Income Tax Act Sections. Accessed June 2024
6. CPA Canada – Comparing Sects. 85 & 86. Accessed June 2024
7. CRA Excluded Property List IC76–19R. Accessed June 2024
8. Income Tax Act s84.1 Deemed Dividends. Accessed June 2024

Real-World Case Study Demonstrating Section 85 Application

Section 85 tax planning helps business owners push off paying capital gains tax. They do this by moving assets into a corporation at an elected amount. This amount replaces the normal value the government would use. It’s a smart way to plan corporate taxes and delay tax payments in Canada.

Detailed Scenario Including Numeric Illustrations of Tax Deferral Benefits

Imagine a business owner in Toronto. They transfer equipment and goodwill valued at $1,200,000 to a new company. The cost they paid for those assets was $400,000. They pick the elected amount as $400,000 to defer all capital gains right away.

By choosing the cost base on Form T2057 and filing it on time with their tax return ^{[^1]}, they avoid immediate capital gains tax. Cash taken out ($100,000) stays below limits that cause extra taxes ^{[^2]}. This keeps cash flowing without paying taxes right now.

Description of Asset Types Transferred and Election Structuring

The assets moved include equipment in Class 8, which can cause recapture if sold alone. Also included is goodwill under Class 14.1 that qualifies for rollover treatment ^{[^3]}. Picking the elected amount lets them decide if they want to defer all gains or recognize some gains now. Sometimes it’s better to pay some gains immediately if you have losses or credits to balance ^{[^4]}.

Section 85 rollovers differ from Section 86 reorganizations. Both swap assets for shares within companies ^{[^5]}. But Section 85 lets you set elected amounts per asset type. That gives more control over how much gain you realize now versus later.

Outcomes for the Business Owner and Corporation Post-Rollover

• The owner keeps control through shares.
• Capital gains stay deferred until assets sell later.
• Paid-up capital adjusts properly for dividends down the road.
• The company’s structure matches plans for selling or succession without immediate tax hits.

This method fits good corporate tax planning rules found in Canada’s Income Tax Act ^{[^6]}.

Documentation and Compliance Best Practices

Good paperwork and filing on time make sure your Section 85 election works without penalties.

Checklist of Required Forms and Supporting Evidence

• Form T2057 — This form lists property details and elected amounts. File it by the earliest due date between buyer or seller’s returns ^{[^7]}.
• Records showing shares issued match consideration.
• Valuations backing up fair market values used on elections.

Having clear records helps avoid CRA audits over values or errors.

Importance of Timely Filing and Accurate Valuations

Filing late means penalties capped by transaction value plus interest ^{[^8]}. Wrong valuations risk triggering unintended gain recognition too soon.

Filing promptly also protects eligibility for related elections like subsection 22 inventory transfers or section 84.1 rules against surplus stripping when needed.

Managing Price Adjustment Clauses and Amended Elections

Price adjustment clauses let parties tweak asset values after transfer but affect final amounts reported on Form T2057 ^{[^9]}. You can amend elections later but face deadlines and possible penalty changes.

Watch boot arrangements carefully — cash over limits triggers immediate taxable gains instead of deferral ^{[^10]}.

Legal and Professional Advice Importance

Getting advice from experts matters because industries like medical practices or real estate have special rules with CRA ^{[^11]}.

Professionals keep your filing aligned with changes such as updates effective January 2026 on Form T2057 procedures ^{[^12]}. Trying this yourself often leads to mistakes ^{[^13]}.

Choosing CPA firms experienced in Section 85 strategies ensures proper paperwork ready for audits. They also work with legal teams on share classes, ^[14] price adjustments, ^[15] estate freezes, ^[16] holding company setups, ^[17] and anti-surplus rules. ^[18]

Working with pros builds confidence in your corporate tax plans that last across Ontario’s competitive business scene. ^[19]

Footnotes:

1. CRA – Form T2057 Instructions, accessed June 2024
2. Income Tax Act s.85(3), accessed June 2024
3. CRA Folio S4-F3-C1: Eligible Property, accessed June 2024
4. CRA – Elected Amount Rules, accessed June 2024
5. Department Justice – Income Tax Act Sections 85 &86 Comparison, accessed June 2024
6. CPA Canada – Corporate Tax Planning Overview, accessed June 2024
7. CRA Deadline Guidance – Late-filed Elections Penalties, accessed June 2024
8. Ibid., Penalty Cap Details
9. CRA Folio S4-F3-C1 Price Adjustment Clauses, accessed June 2024
10. See Strategy 2 “Using Boot” section above; CRA IC76R guidance
11. Industry-specific regulatory bodies OHIP / RCPSC references; see § How Does… Apply Across Industries We Serve?
12. [12–19] Internal Gondaliya CPA procedural knowledge verified against latest CRA bulletins

For help with complex rollover transactions — including modeling your best Section 85 elected amounts — contact Gondaliya CPA at info@gondaliyacpa.ca or call 647‑212‑9559 for a free consult on maximizing Canadian capital gains deferral through proper planning.

How Gondaliya CPA Supports Section 85 Tax Planning

Gondaliya CPA offers clear Section 85 tax planning help for business owners in Canada. We focus on corporate tax planning that fits your needs. Our team applies the Section 85 rollover to reduce immediate taxes and keep things in line with CRA rules. We handle asset transfers, shares, and T2057 forms carefully and on time.

We use our experience with tax-deferred reorganizations to make deals that fit your goals. Whether you want to freeze value for succession or move assets between holding companies, we guide you. Early checks on valuation and anti-avoidance rules help lower risks of audits or mistakes.

Clients get fixed fees, quick responses—even on weekends—and clear updates throughout their Section 85 capital gains deferral process. Our support helps businesses across Ontario and all over Canada plan their taxes smartly.

Summary of Section 85 Tax Planning Benefits

Section 85 tax planning lets Canadian business owners delay paying capital gains tax when moving assets into corporations. The key is picking an elected amount between cost base and market value to push taxable gain into the future.

This delay helps keep cash flow steady by lowering income taxes now. It also gives room for strategies like estate freezes or setting up holding companies. Plus, it allows asset transfers between corporations without extra tax hits on depreciable items.

Good corporate tax planning means filing Form T2057 properly, watching deadlines, and managing boot payments right. These steps protect you from penalties or losing deferral perks under CRA rules.¹. Well-done Section 85 rollovers can help preserve wealth over time for small and medium businesses in many fields like real estate, healthcare, or tech startups.

Benefits at a glance:

• Capital Gains Deferral: Delay taxable gain by choosing an amount below market value
• Minimize Immediate Tax Liability: Control how much tax shows up now
• Corporate Restructuring Flexibility: Use estate freezes or holdco setups easily
• Compliance Assurance: Correct Form T2057 filing lowers audit chances
• Cash Flow Preservation: Avoid paying taxes upfront due to triggered gains

Contact Information and Call to Action

Need help with Section 85 tax planning for your business in Toronto or anywhere in Canada? Gondaliya CPA can assist you. Our licensed team knows corporate tax planning inside out and handles complex asset moves under current Income Tax Act rules updated through 2026.

Reach out today:

• Phone: 647-212-9559
• Email: info@gondaliyacpa.ca

Book a free consultation with no pressure. Just honest advice from someone who’s helped over 1300+ clients get great reviews for Canadian SME tax work.

Sharad Gondaliya, CPA (Canada & USA), has 10+ years helping hundreds of Canadian business owners.
Content checked by Sharad Gondaliya, CPA (Canada & USA).

Frequently Asked Questions on Section 85 Tax Planning

Strategic Insights: Applying Section 85 Tax Planning Across Industries

• Medical professionals can defer goodwill-related gains effectively.
• Real estate firms benefit by transferring properties into corporations without upfront taxes.
• Tech startups use rollovers to manage share structures during investor rounds.
• Manufacturing businesses leverage rollovers in restructurings to preserve cash flow.
• Family-owned businesses apply estate freezes to ease wealth transfer across generations.

How Gondaliya CPA Ensures Success in Your Section 85 Planning

• We verify fair market values with credible sources.
• We prepare complete Form T2057 submissions on time.
• We structure rollovers minimizing boot-triggered taxes.
• We advise on legal implications including anti-surplus rules.
• We provide ongoing updates on regulatory changes affecting your plan.

For expert guidance tailored to your needs in Toronto or anywhere in Canada contact Gondaliya CPA at info@gondaliyacpa.ca or call 647‑212‑9559 today.

The reason for the rollover differs by sector. Here are eleven and what usually drives it.

• Medical doctors & physician professional corporations: Goodwill carries the gain, and college rules constrain who may hold the shares issued for it.
• Real estate investors, landlords & holding companies: Appreciated property moves into a holdco, with land transfer tax checked alongside.
• Technology startups & SaaS: Share classes are set before investors arrive, since fixing them afterwards is far harder.
• Consulting Firms: The freeze usually follows a person joining rather than a tax calculation.
• Construction, general contractors & skilled trades: Plant and equipment move out of the operating company to sit behind a holdco.
• Restaurants & food and beverage: Pre-sale reorganizations keep accrued gains inside the corporation until the sale closes.
• Dentists & dental practices: Associate buy-ins are structured through share classes created at the freeze.
• Property developers & builders: Completed projects are isolated in separate entities to contain risk.
• E-commerce & online retailers: Brand and platform assets often sit better in a holdco than the trading company.
• Transportation, logistics & trucking: Separating the fleet from operating risk is a common reason to roll assets over.
• Daycare, childcare & CWELCC services: Succession within family-owned operations is the usual trigger here.

Professional Guidance on Section 85 Planning: How Gondaliya CPA Supports Canadian Business Owners

Section 85 is one provision doing several different jobs. It moves a proprietorship into a corporation, freezes value for the next generation, shifts property into a holdco, and cleans up a structure before a sale. In each case the mechanics are the same and only one number really matters: the elected amount. Gondaliya CPA models that number and handles the filing on a fixed fee.

We handle what decides the outcome: valuing the assets properly so the fair market value ceiling holds up, modelling elected amounts against your losses, exemptions and cash needs rather than defaulting to full deferral, keeping boot inside the limit, checking section 84.1 exposure where the parties are related, tracking paid-up capital and adjusted cost base from day one, coordinating price adjustment clauses with your lawyer, and filing Form T2057 by the earliest deadline of any party.

Our team works from your own asset schedules and objectives rather than a template. Freeze, holdco, succession or pre-sale, you get clear advice and a fixed price before we start.

• Elected amount range: Cost base or UCC up to fair market value
• Boot limit: Excess over the elected amount is taxable now
• Minimum shares: At least one, under s.85(1)(e.2)
• Corporate deadline: Six months after fiscal year end
• Individual deadline: April 30 after calendar year end
• Which applies: The earliest among all parties
• Goodwill: Class 14.1
• Inventory: Needs a subsection 22 election
• Related parties: Section 84.1 deemed dividend risk
• Share ACB: Elected amount plus consideration paid

• For: Business owners with appreciated assets planning a freeze, a holding company, a succession or a sale, who want the elected amount modelled rather than defaulted.
• Not For: Owners needing large cash extraction now, or straightforward share sales where the paperwork outweighs the deferral.

• Section 85 rollover: A transfer of eligible property to a corporation with tax deferred by election.
• Elected amount: The value chosen in place of fair market value, setting proceeds and cost base.
• Adjusted cost base: The tax cost of property, and of the shares received on a rollover.
• Undepreciated capital cost: The remaining tax cost pool of depreciable property.
• Fair market value: The ceiling above which an elected amount triggers gain now.
• Boot: Non-share consideration such as cash, debt relief or a promissory note.
• Paid-up capital: The amount a corporation may return to shareholders tax free.
• Class 14.1: The capital cost allowance class covering goodwill and similar intangibles.
• Recapture: Previously claimed depreciation brought back into income on disposal.
• Estate freeze: Fixing current value in preferred shares so future growth accrues to others.
• Growth shares: The class issued to heirs or trusts to capture future appreciation.
• Holding company: A corporation holding assets or shares apart from the operating business.
• Section 84.1: The anti-surplus stripping rule that can deem boot to be a dividend.
• Section 86: The share exchange reorganization provision, requiring no election form.
• Price adjustment clause: A contractual mechanism to correct valuation after closing.
• Form T2057: The election form filed jointly by transferor and transferee.

Section 85 Planning Readiness Check

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Want a checklist to work from? You can download our free Section 85 planning checklist before your consultation.

Section 85 tax planning and capital gains deferral strategies for effective corporate tax planning in Canada

Next Steps

Please book a free consultation with Gondaliya CPA and bring a list of the appreciated assets, what you paid for them, and what you are trying to achieve, whether that is a freeze, a holdco or a sale. Those three let us model the elected amount quickly. You will get a fixed fee before any work begins. If our content helps, please add gondaliyacpa.ca as a preferred source on Google.

Published: August 19, 2026  ·  Last updated: August 19, 2026

Editorial policy: We research against CRA and CPA Ontario sources, fact-check the figures, and Sharad Gondaliya, CPA, reviews the content, which we update as the rules change.

Disclaimer: This article is educational information only and is not tax, legal, or financial advice. Figures marked illustrative are examples rather than quotes or guarantees. It reflects CRA rules current to 2026, including the elected amount range between cost base and fair market value, the boot rules under which excess consideration is taxable immediately, the single share requirement under subsection 85(1)(e.2), the section 84.1 deemed dividend rule, and the Form T2057 filing deadlines. Rates, limits and expensing rules change and outcomes depend on your specific facts. Please consult a licensed CPA before acting.