Tuesday Review Questions - Question1 Ms. Lancaster starts a...

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Question 1 Ms. Lancaster starts a CCPC in 1970 with an equity investment of $200,000 (PUC), of which the corporation uses $100,000 (ACB) to purchase land. Two years later, the V-day value of the land is $150,000 (V-day). 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 (PUC) 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? 1972 Deemed Disposition Pre-72 CSOH POD $150,000 50,000 ACB (100,000) CG $50,000 2010 CDA POD $1,000,000 90,000 V-day (150,000) 425,000 CG $850,000 515,000
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Tuesday Review Questions - Question1 Ms. Lancaster starts a...

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