Sundance Ltd. is Canadian controlled private corporation. All of its shares have always been owned by Rob Red. The shares have a fair market value $900,000, a PUC of $200,000, and an adjusted cost base of $200,000. The Company has no balance in its GRIP account. At this time, Mr. Red exchanges all of his Sundance shares for cash of $200,000 and preferred shares that are redeemable for $700,000.
Determine the ACB and the PUC of the redeemable preferred shares. Indicate the amount, and type, of any income that will result from this transaction. Show your calculations.

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The Answer of Sundance Ltd. is Canadian controlled private corporation. All of its shares have always been owned by Rob Red. The shares have a fair market value $900,000, a PUC of $200,000, and an adjusted cost base of $200,000. The Company has no balance in its GRIP account. At this time, Mr. Red exchanges all of his Sundance shares for cash of $200,000 and preferred shares that are redeemable for $700,000.
Determine the ACB and the PUC of the redeemable preferred shares. Indicate the amount, and type, of any income that will result from this transaction. Show your calculations.