The Ceasar Family The Ceasars own Ceasar's Undertaking Inc. (CUI). CUI owns and operates a number...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
The Ceasar Family The Ceasars own Ceasar's Undertaking Inc. ("CUI"). CUI owns and operates a number of funeral homes across Ontario and is a private corporation. CUI has been very successful over the years. Cal Ceasar, who is age 62, started the company many years ago and worked long hours in the company for literally decades. Cal started working for a funeral home owned by his uncle. He saved and saved and was finally able to purchase a funeral home of his own. The company has grown exponentially since that time. Cal has recently retired. His wife Julie, age 60, has never really worked in the business. She was a drama professor and also has recently retired. In the early days of CUI, she occasionally helped with large funerals for a day here and there. The Ceasars' eldest child Mark, age 35, is now running the business. He is working long hours, at least 60 per week on average, and often complains that he has no time for his family. The business is growing so Mark expects his workload to only grow. He doesn't think It is likely that either of his younger siblings will ever become involved in the business. Mark has hired a manager which has been a great help. The Ceasars' middle child, Anthony, is 23. Anthony hopes to establish a career as an opera singer (he has a lovely baritone voice). He is currently in his final year of opera studies at the University of Toronto Faculty of Music. He has no interest in working for CUI on a regular basis. He has worked for CUI in the summers during high school and university to help fund his education, probably averaging 35 hours per week for the summer months. The youngest child, Portia, is 16. She doesn't have any interest in the business at this point in time. She has always loved plants and gardening and would like to become a landscape architect. The shareholdings in CUI are as follows: Cal - 1,000 voting preferred shares (1 vote per share), redeemable and retractable at $5,000,000 with a discretionary dividend rate; Cal contributed $100 to CUI for these shares Julie - 1,000 voting preferred shares, (1 vote per share) redeemable and retractable at $5,000,000 with a discretionary dividend rate; Julie contributed $100 to CUI for these shares; she has made no other monetary contributions to CUI Mark - 100 Class A voting common shares Anthony - 100 Class B voting common shares Portia - 100 Class C voting common shares The three classes of common shares are equal in every respect except that dividends can be paid on each class independently. All three classes specify one vote per share. It is estimated that the current fair market value of all the common shares in total is approximately $5,000,000. Each of the children paid $10 to CUI for their shares. Each shareholder purchased their shares with their own money. The total value of CUI is approximately $15,000,000 preferred shares worth $10,000,000 and common shares worth $5,000,000). Approximately 45% of this value is derived from the funeral home real estate with the remaining 55% from the service operations of CUI. The Ceasars want to know the tax implications of paying dividends to each family member. They know there is a tax provision that can prevent income splitting but are not sure of the details and how it would apply in their family situation. Provide a full analysis for each family member. The Ceasar Family The Ceasars own Ceasar's Undertaking Inc. ("CUI"). CUI owns and operates a number of funeral homes across Ontario and is a private corporation. CUI has been very successful over the years. Cal Ceasar, who is age 62, started the company many years ago and worked long hours in the company for literally decades. Cal started working for a funeral home owned by his uncle. He saved and saved and was finally able to purchase a funeral home of his own. The company has grown exponentially since that time. Cal has recently retired. His wife Julie, age 60, has never really worked in the business. She was a drama professor and also has recently retired. In the early days of CUI, she occasionally helped with large funerals for a day here and there. The Ceasars' eldest child Mark, age 35, is now running the business. He is working long hours, at least 60 per week on average, and often complains that he has no time for his family. The business is growing so Mark expects his workload to only grow. He doesn't think It is likely that either of his younger siblings will ever become involved in the business. Mark has hired a manager which has been a great help. The Ceasars' middle child, Anthony, is 23. Anthony hopes to establish a career as an opera singer (he has a lovely baritone voice). He is currently in his final year of opera studies at the University of Toronto Faculty of Music. He has no interest in working for CUI on a regular basis. He has worked for CUI in the summers during high school and university to help fund his education, probably averaging 35 hours per week for the summer months. The youngest child, Portia, is 16. She doesn't have any interest in the business at this point in time. She has always loved plants and gardening and would like to become a landscape architect. The shareholdings in CUI are as follows: Cal - 1,000 voting preferred shares (1 vote per share), redeemable and retractable at $5,000,000 with a discretionary dividend rate; Cal contributed $100 to CUI for these shares Julie - 1,000 voting preferred shares, (1 vote per share) redeemable and retractable at $5,000,000 with a discretionary dividend rate; Julie contributed $100 to CUI for these shares; she has made no other monetary contributions to CUI Mark - 100 Class A voting common shares Anthony - 100 Class B voting common shares Portia - 100 Class C voting common shares The three classes of common shares are equal in every respect except that dividends can be paid on each class independently. All three classes specify one vote per share. It is estimated that the current fair market value of all the common shares in total is approximately $5,000,000. Each of the children paid $10 to CUI for their shares. Each shareholder purchased their shares with their own money. The total value of CUI is approximately $15,000,000 preferred shares worth $10,000,000 and common shares worth $5,000,000). Approximately 45% of this value is derived from the funeral home real estate with the remaining 55% from the service operations of CUI. The Ceasars want to know the tax implications of paying dividends to each family member. They know there is a tax provision that can prevent income splitting but are not sure of the details and how it would apply in their family situation. Provide a full analysis for each family member.
Expert Answer:
Answer rating: 100% (QA)
attributable to the various real estate that the CUI owns Given the family dynamics and the sharehol... View the full answer
Related Book For
Business Statistics A Decision Making Approach
ISBN: 9780133021844
9th Edition
Authors: David F. Groebner, Patrick W. Shannon, Phillip C. Fry
Posted Date:
Students also viewed these law questions
-
The Lyons family own Lyons Renovations Inc. ("LRI"), a private corporation which has an April 30 year end. LRI operates in the GTA. LRI oversees and co-ordinates major renovations of both residential...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Use a calculator to approximate the value. Round your answer to two decimal places. arccos(0.051)
-
When testing a new treatment, what is the difference between statistical significance and practical significance? Can a treatment have statistical significance, but not practical significance?
-
Suppose that a sample of customers per hour were randomly taken from a store and that the sample standard deviation of the number of customers per hour was 2.4 are based on this information. Assume...
-
Lynn Goldsmith is a photographer known for her photographs of famous musicians. In 1981, Goldsmith had a photography session with the singer Prince. Three years later, Vanity Fair obtained a license...
-
The following are the financial statements of Nosker Company. Additional data: 1. Dividends declared and paid were $20,000. 2. During the year equipment was sold for $8,500 cash. This equipment cost...
-
Blockett Company makes automobile sunshades and incurs the costs listed in the table below. Required: For each of the following costs, choose "Yes" to indicate if the cost is a period or category of...
-
Given a binary string consisting of characters '0's and '1', the following operation can be performed it: Choose two adjacent characters, and replace both the characters with their bitwise XOR...
-
A. Balance Sheet Development & Analysis Putting a balance sheet together is a tedious, but important, job for the farm manager. This problem requires you to put one together, calculate ratios, and...
-
Topic: Small Data 1- How do you define Small Data? 2- Can Big Data be considered as important as Small Data? 3- What ethical and professional values are involved in data management regardless of its...
-
The total amount the borrower would need to repay a loan Question 7Select one: a. Compound value b. Present value c. Principal d. Maturity value
-
Encik Khairan is the Managing Director (MD) of Teknologi Bakalalan Resources, an organization dealing with producing greeting cards, and has been with the company for 30 years. The majority of...
-
Directions: 2 para per question Scenario: Checkerboard Organic Grocery is a wholesale grocery supplier and an upscale organic boutique market with 25 locations in the United States. All of the...
-
Adam bought a $1,670 custom video gamesound system on a special nointerest plan He made a $100 down payment and agreed to pay the entire purchase off in 15 years The minimum monthly payment is $10 If...
-
According during to the IRS, individuals filing federal income tax returns prior to March 31 received an average refund of $1,088 in 2018. Consider the population of "last-minute" filers who mail...
-
VERCOR provides merger and acquisition consultants to assist corporations when an owner decides to offer the business for sale. One of their news releases, Tax Audit Frequency Is Rising, written by...
-
The manager for Capital Educators Federal Credit Union has selected a random sample of 300 of the credit unions credit card customers. The data are in a file called Capital. The manager is interested...
-
The Xang Corporation operates five clothing suppliers in China to provide merchandise for Nike. Nike recently sought information from the five plants. One variable for which data were collected was...
-
Make a list of six aims that a manager of a high street department store might have. Identify some conflicts that might arise between these aims.
-
If a cinema could sell all its seats to adults in the evenings at the end of the week, but only a few on Mondays and Tuesdays, what price discrimination policy would you recommend to the cinema in...
-
How will a businesss pricing strategy differ at each stage of its products life cycle? First assume that the business has a monopoly position at the launch stage; then assume that it faces a high...
Study smarter with the SolutionInn App