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Calculate the income of the shareholder

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Question - The following transactions pertain to independent Canadian-controlled private corporations and their shareholders. Each transaction described below is separate and distinct from the other transactions.

(a) Ethan Ltd. issued 150 preferred shares for $11,000 cash plus assets with a fair market value of $3,000. The paid-up capital account was increased by $100 per share, as a result of the share issue.

(b) Maya Ltd. redeemed its preferred shares for $15,000. The shares have a paid-up capital of $11,000 and an adjusted cost base ("ACB") of $10,000.

Assume that the corporation has no general rate income pool ("GRIP") balance at all relevant times.

Required - For each of the above transactions,

(i) Calculate the income of the shareholder?

(ii) Calculate the PUC of the shares to the corporation after the transaction?

(iii) Calculate the ACB of the shares to the shareholder after the transaction?

Reference no: EM133025866

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