Generally, keep the Ontario sale's own transaction costs, taxes, and professional fees separate from the capital actually being invested in the U.S. enterprise. Confirm with the relevant advisers which figures belong in each calculation.
Separate the sale-side costs from the investment-side costs
Ask an accountant or tax adviser to identify the net proceeds actually available after the farm sale's own costs and taxes, and treat that net figure, not the gross sale price, as the starting point for the E-2 investment analysis. Keep U.S. business formation and operating costs as their own separate calculation.
Build the budget from net available funds and the actual cost of establishing or buying the enterprise. Keep Canadian sale taxes and closing expenses apart from capital placed into the American business, then separate committed investment, operating reserves, professional work, and verified government charges. Substantiality uses proportionality rather than a fixed dollar minimum. The enterprise must not be marginal: it should have present or future capacity to generate more than a minimal living or make a significant economic contribution, with future capacity generally realizable within five years after normal business activity begins. A frequent mistake is inflating the investment with sale-side expenses or counting untouched personal cash, which can distort both substantiality and the amount truly at risk.
Hypothetical example: An agricultural-equipment rental owner around Strathroy-Caradoc sells her fleet before buying a U.S. rental yard. Her adviser reconciles debt payouts, sale costs, purchase price, equipment orders, and working capital in separate columns. Only qualifying enterprise commitments enter the investment analysis. A staffing and revenue plan addresses non-marginality without inventing immediate operations, while family living costs and Canadian transaction advice remain outside the E-2 capital total.