Easy Technologies Inc EMYSF

RE: Section 85 of the Tax Act

[CrashLanding]

The form that you will need to file with the company's concurrence is form T2057. This is the form to make the Section 85 election. On this form you have a choice of elected amounts. Assuming that there will be no cash on the deal, your choice of elected amounts can range anywhere from your cost base up to the FMV of your EZM stock on the date the merger is completed. If you want to defer the entire gain on your EZM shares you would elect at your cost base. If you want to recognize some of your capital gain on the the transaction, you would elect to use an amount in excess of your cost base. There are a number of valid tax reasons why someone would want to recognize a gain on the transfer, but I won't go into them here. If you elect to defer the entire gain, the aggregate cost base of your EZM shares will become the aggregate cost base of your new Lundin shares. If you elected an amount in excess of your EZM cost base, the elected amount will become the aggregate cost base of your new Lundin shares. You will calculate the per share cost base of your Lundin shares by dividing the aggregate cost base discussed above by the number of Lundin shares received. If you fail to make the election, you will be treated the same as if you sold your EZM shares for FMV and then used the proceeds to buy Lundin shares. Your full gain will be taxable. If the deal is done effective today, the election form must be filed by the earlier of April 30, 2007 (for individuals) and the date that Lundin must file its tax return for the taxation year in which the S.85 transaction takes place. If EZM shares are held in a company, the due date will be the earlier of your company's tax return due date for the year and Lundin's. Normally in public company transactions structured as S.85, the company will send everyone a tax package providing instructions on how to finish completing the election, which will likely already be partially completed by Lundin because they will be the only ones who will be able to fill out some of the information. The company will normally also post a copy of the election form and the tax package in the investors information section of their web-site. If you want to see what the form looks like you can get a copy in the forms and publications section of the CRA web-site at https://www.cra-arc.gc.ca/E/pbg/tf/t2057/README.html . Good luck, Crash