Passage Ltd. is a large, profitable CCPC with a December 31 year-end. Passage Ltd. has one class of shares. The company issued 5,000 shares on January 1, 2018 at a price of $8.40 each. On December 15, 2019, the company issued an additional 10,000 shares at a price of $10.00 per share. On March 31, 2020, the company issued another 12,000 shares at a price of $12.50 per share. J. Singh purchased 800 shares from the first share offering and another 1,000 from the latest issue. There have been no share issuances or redemptions since 2020.

From a review of the prior year’s tax files, the capital dividend account balance on January 1, 2023 is $42,578. During 2023, the company had the following transactions:

Land sold for proceeds of $125,600 (adjusted cost base for the land was $85,200)

Capital Dividends received of $12,500

Net Income for Tax Purposes of $386,000

Capital Dividends paid of $9,300

Shares sold for proceeds of $17,540 (adjusted cost base for the shares was $19,890)

Non-Eligible Dividends paid of $28,540

Prepare an excel spreadsheet calculation for the partner, Jessica abaas that answers the following questions.

(a) The total and per share PUC of the common shares and the preference shares of Passage Ltd.

(b) The total and per share PUC and ACB of the shares of Passage Ltd. owned by J. Singh.

(c) Calculate the Capital Dividend Account (CDA) balance as of December 31, 2023. How much of a tax-free dividend can the corporation pay next year?

Answer rating: 100% (QA)

Step 1 Calculate the total and per share PaidUp Capital PUC of the common shares and the preference ... View the full answer