Individual C owns all of the shares of Cee Ltd., a Canadian-controlled private corporation holding investments in marketable securities. Individual D owns all of the shares of Dee Ltd., a Canadian-controlled private corporation. Dee Ltd. purchased all of the shares of Cee Ltd. from C for $900,000 cash. The Cee Ltd. shares have a PUC and ACB of $100,000. C and D are sisters. Determine C's taxable income from the sale of shares to Dee Ltd. The balance in the GRIP account is nil $ C

Individual C owns all of the shares of Cee Ltd., a Canadian-controlled private corporation holding investments in marketable securities. Individual D owns all of the shares of Dee Ltd., a Canadian-controlled private corporation. Dee Ltd. purchased all of the shares of Cee Ltd. from C for $900,000 cash. The Cee Ltd. shares have a PUC and ACB of $100,000. C and D are sisters. Determine C's taxable income from the sale of shares to Dee Ltd. The balance in the GRIP account is nil $ C

CONCEPTS IN FED.TAX.,2020-W/ACCESS

20th Edition

ISBN:9780357110362

Author:Murphy

Publisher:Murphy

Chapter14: Choice Of Business Entity—operations And Distributions

Section: Chapter Questions

Problem 56P

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CI Individual C owns all of the shares of Cee Ltd, a Canadian-controlled private corporation holding investments in marketable securities. Individual D owns all of the shares of Dee Ltd., a Canadian-controlled private corporation. Dee Ltd. purchased all of the shares of Cee Ltd. from C for $900,000 cash. The Cee Ltd. shares have a PUC and ACB of $100,000. C and D are sisters. Determine C's taxable income from the sale of shares to Dee Ltd. The balance in the GRIP account is nil.
Noi and Tu share equally in the profits, losses, and capital of the accrual basis NT Products LLC. The LLC does not need to report financial information to any third parties, so capital accounts are determined using tax rules (rather than GAAP). Noi is a managing member of the LLC (treated as a general partner) and is a U.S. person. At the beginning of the current year, Noi's capital account has a balance of $427,000, and the LLC has debts of $118,000 payable to unrelated parties. The debts are recourse to the LLC, but neither of the LLC members has personally guaranteed them. Assume that all LLC debt is shared equally between the partners. The following information about NT's operations for the current year is obtained from the LLC's records: Ordinary income $562,000 Dividend income 8,000 Long-term capital loss 18,000 Long-term capital gain 22,000 Charitable contribution 4,000 Cash distribution to Noi 11,000 Year-end LLC debt payable to unrelated parties is…
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Tia Kline, a resident of Canada, is the sole shareholder of KI Inc. She plans to transfer four assets, which she owns, to KI Inc. in exchange for cash and preferred shares of KI Inc. She wishes to receive the maximum amount in cash that she can receive and still defer the recognition of income for tax purposes on the transfer of the assets. Tia and KI Inc. will jointly make a Section 85 election for each of the assets. The following is the details of the assets: FMV UCC $ 230,000 115,000 10,350 46,000 АСВ $ 46,000 80,500 34,500 20,000 $ 181,000 Land Building Equipment 57,500 9,200 17,575 $ 84,275 Goodwill $ 401,350 Required: For each of the four assets individually, state the amount that should be elected as proceeds under Section 85 of the Income Tax Act, state the amount of cash consideration, and state the value of the preferred shares Ms. Kline should accept as consideration for the assets Elected Preferred FMV ACB UCC Cash amount Shares Land $ 230,000 $ 46,000 Building 115,000…
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