User Account

All Pages

Estate Freeze, Taxation

Assignment Help:
Exhibit
Additional information
• Andy currently owns all of the shares of Grand Inc., a CCPC with 1,000 common shares issued and outstanding. Grand Inc. operates an active business in Canada and is a small business corporation with a December 31st year-end. Andy’s shares of Grand Inc. are qualified small business corporation (QSBC) shares
• Grand Inc. was incorporated in 1985 by Andy’s aunt, Mary. In 1985 Mary subscribed for 1,000 common shares of Grand Inc. and paid $3,000, in aggregate, into the company to buy the shares. In 1999 Mary retired and sold all her 1,000 common shares to Andy for $220,000, in aggregate, which was their fair market value (FMV) at the time
• Some friends of Andy’s have done estate freezes themselves and suggested that Andy do something similar. Andy thinks the value of Grand Inc. will increase over the next several years and after discussions with his friends Andy wants to do the following estate freeze in the near future:
1) Grand Inc. will undergo a reorganization of capital, where Andy’s 1,000 common shares will be given up in return for 500 new non-voting preferred shares. Andy does not want to use subsection 85(1) of the Act when doing this reorganization of capital;
2) Andy’s adult children, who are very mature and business savvy, will subscribe for 100 new common shares of Grand Inc. Hence, the children will have voting control of Grand Inc. which Andy is fine with;
3) Andy will sell his 500 non-voting preferred shares of Grand Inc. to Tsai Family Holding Company in return for $800,000 in cash. Tsai Family Holding Company is 50% owned by Andy and 50% owned by Andy’s children and it has lots of cash and liquid assets. Since Andy has never used his capital gains exemption before
Andy’s friends believe he can get the $800,000 tax-free. Grand Inc.’s most recent (December 31, 2013) balance sheet shows the following information (and these figures have remained stable for the past 24 months):
ACB (original
cost) UCC FMV
Active business assets (excluding goodwill) $700,000 $500,000 $600,000
Cumulative eligible capital (goodwill) $20,000 $10,000 $300,000
Long-term portfolio investments $40,000 n/a $60,000
$960,000


draft a report describing and calculating the federal income tax consequences to Andy from the proposed estate freeze. You should give Income Tax Act (ITA) section, subsection and paragraph (where applicable) references in order to support your answer.

Related Discussions:- Estate Freeze

How does the united states tax, Erica is a citizen of a foreign country, an...

Erica is a citizen of a foreign country, and is employed by a foreign-based computer manufacturer. Erica's job is to provide technical assistance to customers who purchase the comp

Draw a scatter plot with the share of the economy, 1.  The NGO called Trans...

1.  The NGO called Transparency International (TI) publishes a "Corruption Perceptions Index" (CPI) that ranks countries on a scale of 0 to 10 based on how corrupt their public sec

Principles , principles of business taxation

principles of business taxation

Taxation Accounting - Capital gains tax (CGT), Critically Evaluate overseas...

Critically Evaluate overseas experiences with this form of tax. (e.g. UK or Australia)

Income tax return, Required: ? Use the following information to complete...

Required: ? Use the following information to complete Phillip and Claire Dunphy's 2012 federal income tax return. If information is missing, use reasonable assumptions to fil

Tax credit for the elderly and disabled, Tax Credit for the Elderly and Dis...

Tax Credit for the Elderly and Disabled - Taxpayers age 65 or older or those under 65 who are retired with permanent and total disability are entitled to claim a credit to decrease

Inherentance., Where do I file a person''s life insurance and what they hav...

Where do I file a person''s life insurance and what they have inherited.

Tax return preparation, Department of Accounting Principles of Federal Inco...

Department of Accounting Principles of Federal Income Taxation IOWA STATE UNIVERSITY ACCT 485 (SPRING 2013) ?TO: Tax Consulting Team FROM: Jon Perkins DATE: March 26th, 2013 RE: Ta

Calculate the taxable income under the throwback rule, This year, the Coral...

This year, the Coral Company Inc. generated $650,000 from its routine business operations. In addition, it sold the following assets, all of which were held for more than 12 months

Compute the service and interest cost for 2012, Sachs Brands' defined benef...

Sachs Brands' defined benefit pension plan specifies annual retirement benefits equal to: 1.2% × current service years × final year's salary, payable at the end of each year. Angel

Write Your Message!

Captcha
Order Assignment

Featured Services

Order Now

Popular Subjects

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

Submit Assignment

Academics

Major Subjects

Majors

Get In Touch

whatsapp: +1-415-670-9521

Phone: +1-415-670-9521

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd