Provided the “few acres of land” are not considered to be “real estate inventory” of the couple who seeks to transfer the property it seems the land would be considered capital property. Capital property is eligible to be transferred to a corporation under the provisions of section 85. Just because the property is going to become inventory to the corporation does not make it inventory of the current owner(s).
Facts surrounding their individual situation would determine whether the “few acres” is considered to be “real estate inventory” or a “capital property” of the couple. Factors such as whether they are already in the business of developing real estate, in the construction business, or if they have a history of buying and selling real estate would influence whether the real estate is inventory or capital property of the current owners. Once again, if it is capital property, then section 85 should be available.
Choosing to developing the property through a corporation might pose some advantages and mitigate some of the liability and risk associated with development. If income tax is an issue, as it seems to be, you should also determine ahead of time how the income will be classified in the hands of the corporation (ie Active Business Income, Specified Investment Income), which also depends on facts of the business.