Compute kit inc general rate income pool

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Reference no: EM13507256

1) Mrs. K wants to transfer the future growth of Kit Inc. to her children now without paying any tax. Explain how this can be done, while meeting her needs (which are discussed further below) by:

(a) using a new (Holding) company, using subsection 85(1) of the Act, receiving the maximum amount of boot and preferred shares for the balance of consideration; and,

(b) without using a new company, using section 86 of the Act, receiving preferred shares as consideration and not taking any boot.

Make sure you describe the income tax consequences to Mrs. K in (a) and (b) above and to the new (Holding) company in (a) above.

2) Compute Kit Inc.'s general rate income pool (GRIP) account balance as of December 31, 2011.

Reference no: EM13507256

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