Early in 2021, Ms. Bond bought $120,000 of common shares in a CCPC company with an annual dividend of $16,000. Ms. Bond would like to transfer these shares to her husband or possibly to her 16-year-old daughter. At the present time, the fair market value of the shares is $200,000. Assume that Ms. Bond and her husband elect out of the 73(1) rollover.

Required:

(a) What are the income tax implications for Ms. Bond and her husband if Ms. Bond lends him the money to purchase the shares from her and he signs an interest-bearing promissory demand note as evidence of the loan?

(b) What are the income tax implications for Ms. Bond and her 14-year-old daughter if Ms. Bond sells the shares to her daughter for $100, which the daughter has saved from babysitting in the neighborhood?

Answer rating: 100% (QA)

A Mrs Bond would realize a capital gain if Amount realized ACB capital loss if Amount realized from sale ACB Half of the capital gain40000 of Mrs B would be taxable included in her income reported for ... View the full answer