Question $16(8$ marks$)$

When Austen inc. was first incorporated, it issued $233,000$ shares at a price of $$18$ per share. The total proceeds were $$4,194,000.$ The following year Jane Lessing acquired $20\%$ of these shares at $$21$ per share. The total cost of the $46,600$ shares was $$978,600.$ During the current year, a creditor of the company has agreed to accept $17,000$ new Austen inc. shares in settlement of debt with a face value of $$350,000.$ At this time, the shares are valued at $$22$ per share. Shortly after this debt settlement, Jane Lessing sells her shares to an arm's length party for $$24$ per share.

Required:

Indicate the tax consequences to the relevant shareholders of the transaction described above. Tax consequences would include the increase or decrease in the individual shareholder's taxable income, any change in the adjusted cost base and$/$or PUC of any shares that are sill in the hands of the Individual shareholder after the described transactions, and any federal dividend tax credits that result from the described transactions. Assume that ary dividends that arise are non$-$eligible.