Described transaction and dividends are non-eligible

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Indicate the tax consequences to the relevant shareholders of the transaction. Tax consequences would include the increase or decrease in the individual shareholder's Taxable Income, any change in the adjusted cost base and/or PUC of any shares that are still in the hands of the individual shareholder after the described transaction(s), and any federal dividend tax credits that result from the described transaction. Dividends are non-eligible.

Problem 1: Jason Mark owns 15 percent of the outstanding voting shares of Mark Ltd. These shares were purchased when the Company was formed. At this time, 225,000 shares were sold at a price of $15, resulting in a total PUC of $3,375,000.

Problem 2: One of the Company's creditors has agreed to accept 30,000 new Mark Ltd. shares in settlement of debt with a face value of $550,000. At this time the Mark Ltd. shares are valued at $20 per share.

Problem 3: Shortly after this time, Jason Mark sells all of his Mark Ltd. shares for $23 per share.

Reference no: EM132459230

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