REVIEW - Tuesday Review Solutions

REVIEW - Tuesday Review Solutions - Question1 Ms. Lancaster...

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
Question 1 Ms. Lancaster starts a CCPC in 1970 with an equity investment of $200,000, of which the corporation uses $100,000 to purchase land. Two years later, the V-day value of the land is $150,000. In 2010, Ms. Lancaster sells the land for $1 million and subsequently decides to wind-up the business and retire. The proceeds of distribution on the remaining business assets is $3 million and no capital gains or losses occur on those distributions. There are $1.4 million in outstanding liabilities. During the 80’s and 90’s, she had contributed an additional $1,000,000 into the business in return for shares. The corporation’s Capital Dividend Account had a balance of $90,000 before the disposition of any assets began. Assume the tax rate is 20%. What is Ms. Lancaster’s taxable dividend and taxable capital gain on the wind-up of the corporation?
Background image of page 1

Info iconThis preview has intentionally blurred sections. Sign up to view the full version.

View Full DocumentRight Arrow Icon
Question 1 Solution: Land ACB 100,0 00 Pre '72 CSOH V-day value 150,0 00 50,0 00 2010 POD 1,000,000 1972 V-Day 150,0 00 ACB 100,0 00 CG 50, 000 CDA 2010 Disposition of land 90,0 00 POD 1,000,0 00 425,0 00 ACB 15 0,000 515,0 00 CG 85 0,000 TCG 42 5,000 T.I. $425,000 Tax @20% (8 5,000)
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 7

REVIEW - Tuesday Review Solutions - Question1 Ms. Lancaster...

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online