Reference no: EM133071231

Question - Brian Thompson gave $50,000 to his wife, Shannon, for the acquisition of shares of a Canadian company on the Toronto Stock Exchange. During the year, an eligible dividend of $8,000 cash was paid on the shares owned by Mrs. Thompson. What are the tax consequences for the above situation?

A) Shannon Thompson will include the dividend in her income. The amount to be included in Shannon's income is $8,000 plus a 38% gross up = $11,040. She will also be eligible for the dividend tax credit.

B) Brian Thompson will include the dividend in his income since the attribution rules apply. The amount to be included in Brian's income is $8,000 plus a 15% gross up = $9,200. He will also be eligible for the dividend tax credit.

C) Shannon Thompson will include the dividend in her income. The amount to be included in Shannon's income is $8,000 plus a 15% gross up = $9,200. She will also be eligible for the dividend tax credit.

D) Brian Thompson will include the dividend in his income since the attribution rules apply.. The amount to be included in Brian's income is $8,000 plus a 38% gross up = $11,040. He will also be eligible for the dividend tax credit.