After selling its assets and paying all of its liabilities, a corporation has cash of $1,237,000...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
After selling its assets and paying all of its liabilities, a corporation has cash of $1,237,000 available for distribution to its only shareholder. The corporation was established 10 years ago with an investment of $189,000. This figure is both the PUC and the adjusted cost base of the shares. The balance in the capital dividend account is $140,000 and the company makes the appropriate election to have the distribution of this amount be treated as a capital dividend under ITA 83(2). Required: Determine the tax consequences of distributing the $1,237,000 to the corporation's only shareholder. Be sure to show Wind-up/Taxable dividend amount (before gross-up) and any capital gain to the shareholder. After selling its assets and paying all of its liabilities, a corporation has cash of $1,237,000 available for distribution to its only shareholder. The corporation was established 10 years ago with an investment of $189,000. This figure is both the PUC and the adjusted cost base of the shares. The balance in the capital dividend account is $140,000 and the company makes the appropriate election to have the distribution of this amount be treated as a capital dividend under ITA 83(2). Required: Determine the tax consequences of distributing the $1,237,000 to the corporation's only shareholder. Be sure to show Wind-up/Taxable dividend amount (before gross-up) and any capital gain to the shareholder.
Expert Answer:
Answer rating: 100% (QA)
To determine the tax consequences of distributing the 1237000 to the corporations only shareholder w... View the full answer
Related Book For
Management Accounting
ISBN: 978-0132570848
6th Canadian edition
Authors: Charles T. Horngren, Gary L. Sundem, William O. Stratton, Phillip Beaulieu
Posted Date:
Students also viewed these law questions
-
Tristan Lang is the sole shareholder of Hot Water Ltd., a corporation with an October 31 year-end. Hot Water Ltd. produces trivia games. Tristan started the corporation with an initial capital...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
Show that 15 is an inverse of 7 modulo 26.
-
The competition for consumer film rental dollars is fierce. A 400-employee company, Netflix offers flat rates for DVD and Blu-ray disc rentals by mail. Users can also stream certain movie titles on...
-
The heats of vaporization for water and carbon disulfide are 40.7 kJ/mol and 26.8 kJ/mol, respectively. A vapor (steam) burn occurs when the concentrated vapor of a substance condenses on your skin....
-
This exercise is based on Section 5.2 of Box et al. [2005]. An experiment for optimizing response yield (y) in a chemical plant operation was conducted. The three factors considered are temperature...
-
A study of cigarette demand resulted in the following logarithmic regression equation: Here, Q denotes annual cigarette consumption, P is the average price of cigarettes, Y is per capita income, A is...
-
a. $30,000 W of supplies is purchased with casi. Supplies Cash Accounts Supplies Debit $30,000 Credit $30,000 $30,000 Cash $30,000 b. $10,000 worth of supplies is used to provide clients with goods...
-
For each of the following lists of premises, derive the conclusion and supply the justification for it. There is only one possible answer for each problem. (1) 1. G F 2. F 3. _______ ____ (2) 1. S...
-
Which of the following statements is true of the North American Free Trade Agreement (NAFTA)? a. It reduced income. b. It intended to reduce exports. c. It increased trade tariffs. d. It intended to...
-
A device that both emits and receives sound waves is traveling at \(80 \mathrm{~km} / \mathrm{h}\). The emitted waves have a frequency of \(700 \mathrm{~Hz}\). If the waves are reflected off a...
-
A supersonic jet airplane flying horizontally and passing directly overhead creates a shock wave that makes an angle of \(47^{\circ}\) with the horizontal. What is the speed of the airplane?
-
As a boat travels at \(48.0 \mathrm{~km} / \mathrm{h}\) across the surface of a still lake, the waves it creates in the water have a speed of \(20.1 \mathrm{~km} / \mathrm{h}\). What is the angle of...
-
A violinist is bowing one string to produce a certain note. List three ways in which she can produce a note of higher frequency, either while playing or by preparing the violin differently before she...
-
A speedboat traveling at \(73.0 \mathrm{~km} / \mathrm{h}\) causes a shock wave that makes an angle of \(14.3^{\circ}\) with the path of the boat. At what speed are the waves moving through the water?
-
es Joyce Murphy runs a courier service in downtown Seattle. She charges clients $0.42 per mile driven. Joyce has determined that if she drives 3,300 miles in a month, her total operating cost is...
-
The bookkeeper for Riley, Inc., made the following errors: a. A cash purchase of supplies of $357 was recorded as a debit to Supplies for $375 and a credit to Cash of $375. b. A cash sale of $3,154...
-
"The higher the interest rate, the less I worry about errors in predicting terminal values." Do you agree? Explain.
-
Banerjee Company expects to receive $200 at the end of each of the next five years and an additional $1,000 at the end of the fifth year. Therefore, the total payments will be $2,000. What is the NPV...
-
Identify two simplifying assumptions that underlie CVP analysis.
-
By conducting testcrosses, researchers have found that the sweet pea plant has seven linkage groups. How many chromosomes would you expect to find in leaf cells of sweet pea plants?
-
Describe the unique features of ascomycetes that facilitate genetic analysis of these fungi.
-
Though we often think of genes in terms of the phenotypes they produce (e.g., curly leaves, flaky tail, brown eyes), the molecular function of most genes is to encode proteins. Many cellular proteins...
Study smarter with the SolutionInn App