Canadian tax principles-2 Lester Inc. has 220,000 common shares outstanding. All of these shares were issued for $13 each, for a total of $2,640,000, which is also equal to the PUC of the shares. A dissident shareholder, who acquired 10,000 shares at a price of $11 per share, has repeatedly voiced dissent with the direction c the company. As a result, the company has agreed to sever its connection with the dissident shareholder and has offered to redeem his shares for $13.50 each, an offer which has been accepted. Any dividends resulting from the redemption will be considered as non-eligible. Required: Determine the income tax consequences of this redemption to the departing shareholder. YOU MUST SHOW ALL OF YOUR CALCULATIONS AND PROPERLY LABEL THEM.

Canadian tax principles-2 Lester Inc. has 220,000 common shares outstanding. All of these shares were issued for $13 each, for a total of $2,640,000, which is also equal to the PUC of the shares. A dissident shareholder, who acquired 10,000 shares at a price of $11 per share, has repeatedly voiced dissent with the direction c the company. As a result, the company has agreed to sever its connection with the dissident shareholder and has offered to redeem his shares for $13.50 each, an offer which has been accepted. Any dividends resulting from the redemption will be considered as non-eligible. Required: Determine the income tax consequences of this redemption to the departing shareholder. YOU MUST SHOW ALL OF YOUR CALCULATIONS AND PROPERLY LABEL THEM.

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter18: Comparative Forms Of Doing Business

Section: Chapter Questions

Problem 31P

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