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

Tax return problem-federal and state income taxes , Problem Facts. Larry K....

Problem Facts. Larry K. and Cathy L. Zepp have been married 19 years. Larry is 62 years old (Social Security number 123-45-6789) while Cathy is 57 years old (Social Security number

Service tax, there is significant difference between the average service ta...

there is significant difference between the average service tax collection per assessee in Pune zone and the average service tax collection per assessee in the country

Independence standard board, Independence Standard Board (ISB) - This is pr...

Independence Standard Board (ISB) - This is private sector standard-setting body governing the independence of AUDITORs from their public company clients. It came about from discus

Tax, evaluate the importance of the principal issue litigated in the case i...

evaluate the importance of the principal issue litigated in the case in question using the tax research steps outlined in Appendix A of your text.

Deferred tax liability, Lehman Corporation purchased a machine on January 2...

Lehman Corporation purchased a machine on January 2, 2011, for $2,000,000. The machine has an estimated 5-year life with no salvage value. The straight-line method of depreciation

Wct, How to raise an invoice with WCT for Civil construction job

How to raise an invoice with WCT for Civil construction job

Investment account output, Suppose a resident with yearly income of $40,000...

Suppose a resident with yearly income of $40,000.00. The Medicare Levy will be $600.00 and the taxes will be $5,550.00/year or $106.73/week. His/her net salary per year will be $33

Compute the cost of debt, A company issues 15-year, $1,000 par-value bonds,...

A company issues 15-year, $1,000 par-value bonds, with a coupon rate of 5%. The bonds are sold for $619.70. The tax rate is 30%. Compute the cost of debt before taxes and after tax

Tax memo research , can you help with tax research assignment

can you help with tax research assignment

TRANSFER PRICING, (i) Discuss, using appropriate examples, the concept of ‘...

(i) Discuss, using appropriate examples, the concept of ‘transfer pricing’ and explain why tax authorities around the world have become concerned about it.

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