K Inc. is a Canadian corporation whose shares are traded on a stock exchange. K operates three
Question:
To alleviate this problem K is considering selling off the third division as a separate entity. They feel this can be achieved by setting up a separate corporation to house the division. The separate corporation would issue shares to the public and the funds used to acquire the division from K Inc. Management has also been looking at the use of an income trust as an alternative to the corporate format.
K has requested your advice on this matter.
Required:
1. Explain to K how each of the structures work with respect to profits, tax, and distribution to investors. Demonstrate with calculations where possible.
2. Is an income trust appropriate in this situation? Explain.
3. Would your answer to (2) above be different if the third division was a group of real estate rental properties? Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Distribution
The word "distribution" has several meanings in the financial world, most of them pertaining to the payment of assets from a fund, account, or individual security to an investor or beneficiary. Retirement account distributions are among the most...
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Related Book For
Canadian Income Taxation Planning And Decision Making
ISBN: 9781259094330
17th Edition 2014-2015 Version
Authors: Joan Kitunen, William Buckwold
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