Fresser and Klutz are spouses. Fresser operates a construction company, Fresser Inc., which uses all of its assets (fair market value of $1.2 million) in its active business carried on in Calgary. Klutz received an inheritance of $100,000 which he invested in Fresser Inc. 4% preference shares on January 1, 2014. Fresser Inc. immediately used this cash to pay down a bank loan. On January 1, 2015, Fresser Inc. ceased operations and liquidated its assets leaving $200,000 of cash in the company until January 31, 2016, when the 4% preference shares were redeemed for $100,000. In each of 2014 and 2015, dividends of $4,000 were paid on the preference shares.

REQUIRED

Determine the amount attributed to Klutz over the three years, assuming that the prescribed interest rate is a constant 3% and that dividends were paid from the low-rate income pool.