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

Compute taxable income, Kline Company, an accrual basis calendar year corpo...

Kline Company, an accrual basis calendar year corporation, reported $560,000 net income before tax on its financial statements prepared in accordance with GAAP for 2011. Kline's re

Investment value and rate, The second task of the program is to calculate...

The second task of the program is to calculate/display a possible investment. First, the program should ask the amount of money that he/she requires (on an average) per week a

Example of tax file, Research Problem 2: Carol is a successful physician wh...

Research Problem 2: Carol is a successful physician who owns 100% of her incorporated medical practice. She and her husband, Jared, are considering the purchase of a commercial off

.calculate the semi annual interest payments, 1. a company issues $10,000, ...

1. a company issues $10,000, 10%, 5 year bonds with semi annual payments principal amount, face value matuity value or par value: $10,000 stated or contract interest rate: 10% (per

Out, Roberta Santos age 41

Roberta Santos age 41

Tds , tds late filing fee code & late filing interest code

tds late filing fee code & late filing interest code

K- vat 2003, i want some problems with solutions on karnataka value added t...

i want some problems with solutions on karnataka value added tax 2003

DEPRECIATION, In April 2016, Reiko purchased and placed a rental house in s...

In April 2016, Reiko purchased and placed a rental house in service. She paid $184,000, including $27,000 for the land. Compute her 2016 depreciation on the rental.

What is the journal entry to record income taxes, Toggle's Fishing Fleet ha...

Toggle's Fishing Fleet had 20,000 shares of 5%, $20 par value preferred stock and 15,000 shares of $25 par value common stock outstanding throughout 2012. These data apply to each

Sec 351 of income tax act, Bob and Carl transfer property to Stone Corporat...

Bob and Carl transfer property to Stone Corporation for 90% and 10% of Stone Stock, respectively. Pursuant to a biding agreement concluded before the transfer, Bob sells half of hi

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: +91-977-207-8620

Phone: +91-977-207-8620

Email: [email protected]

TERMS & POLICIES

HELP & SUPPORT

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