Aero Ltd. has 20,000 shares outstanding and the total PUC of all these shares is $1,600,000. Karen Flint owns 15,000 of the outstanding Aero shares. They were acquired by her at a total cost to Karen of $40 per share. During the current year, Karen's shares were redeemed by the corporation for proceeds of $90/share. Aero Ltd. is a CCPC and all dividends declared/paid are non-eligible (15% gross-up).

Required:

What taxable amounts must be added to Karen's income as a result of this share redemption?

Answer rating: 100% (QA)

Karen must add to her income the difference ... View the full answer