Your client Aisha owns shares in ABC Corporation. The original shares cost $100,000, and they currently...
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Your client Aisha owns shares in ABC Corporation. The original shares cost $100,000, and they currently have a FMV of $150,000. Aisha is considering transferring the shares to her mother or to her 16-year-old daughter. Required: For the following three scenarios, determine the i) amount of income to be recorded by your client Aisha when she transfers the shares, as well as the ii) ACB of the shares to the taxpayer receiving the shares (i.e. her mother or her 16-year-old daughter), and iii) shares will be subsequently sold by the taxpayer receiving the shares; assume the sale price in the future is $200,000; calculate the total gain and who should report it (i.e. Aisha or the taxpayer receiving the shares). Scenario 1: Aisha gifts the shares Scenario 2: Aisha sells the shares for $170,000 Scenario 3: Aisha sells the shares for $130,000 Income (gain) to record on date of transfer New ACB of shares Amount of double taxation from future sale / is attribution? Income (gain) to record on date of transfer New ACB of shares Amount of double taxation from future sale / is attribution? Income (gain) to record on date of transfer New ACB of shares Amount of double taxation from future sale / is attribution? Impact to Aisha Impact to mother Impact to daughter Your client Aisha owns shares in ABC Corporation. The original shares cost $100,000, and they currently have a FMV of $150,000. Aisha is considering transferring the shares to her mother or to her 16-year-old daughter. Required: For the following three scenarios, determine the i) amount of income to be recorded by your client Aisha when she transfers the shares, as well as the ii) ACB of the shares to the taxpayer receiving the shares (i.e. her mother or her 16-year-old daughter), and iii) shares will be subsequently sold by the taxpayer receiving the shares; assume the sale price in the future is $200,000; calculate the total gain and who should report it (i.e. Aisha or the taxpayer receiving the shares). Scenario 1: Aisha gifts the shares Scenario 2: Aisha sells the shares for $170,000 Scenario 3: Aisha sells the shares for $130,000 Income (gain) to record on date of transfer New ACB of shares Amount of double taxation from future sale / is attribution? Income (gain) to record on date of transfer New ACB of shares Amount of double taxation from future sale / is attribution? Income (gain) to record on date of transfer New ACB of shares Amount of double taxation from future sale / is attribution? Impact to Aisha Impact to mother Impact to daughter
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Answer rating: 100% (QA)
Scenario 1 Aisha transfers the shares to her mother i Amount of income to be recorded by Aisha when she transfers the shares Income Fair Market Value of Shares FMV Adjusted Cost Base ACB Income 150000 ... View the full answer
Related Book For
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
Posted Date:
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