In 2016, Mr. X transferred a building to Corp X using Sec 85. Mr X purchased the building in 2010 for 400,000.

In 2016, Mr. X transferred a building to Corp X using Sec 85. Mr X purchased the building in 2010 for 400,000. UCC of the building as at the date of transfer is 260,000 and the current FMV is $3,000,000. Corp X gave Mr. X cash of 400,000, preferred shares with a PUC/FMV of $2,600,000. Agreed Amount $900,000.

In 2017, 25% of the shares were redeemed by Corp X for 3.0M

Determine all the tax consequences associated with this sec 85 transfer. Support your answer with references to the act and all the necessary calculations.