Torin Inc.has 500,000 shares issued and outstanding.These shares were issued for total consideration of $1,125,000.At a later point in time, Jane Dow acquired 1,000 of these shares at a total cost of $3,500.With respect to Ms.Dow's holding of Torin shares, which of the following statements is not correct?

Question

Quizplus · Accepted Answer

Option D is incorrect because if Ms. Dow were to sell the Torin shares for $4,000, she would have a taxable capital gain of $500 (proceeds of $4,000 minus adjusted cost base of $3,500). She would not have a deemed dividend as the company did not declare a dividend and her shares would not be eligible for any dividend payments. The information provided does not allow us to determine the PUC or any other tax implications.

Torin IncHas 500,000 Shares Issued and Outstanding