Ms. Samantha Shields is the sole shareholder of Shields Ltd. It is a Canadian controlled private corporation and its common shares have a fair market value of $920,000, an adjusted cost base (ACB)of $500,000, and a paid up capital (PUC)of $400,000. At this time, Shields Ltd. has no balance in its GRIP account. Ms. Shields exchanges all of her Shields Ltd. shares for cash of $480,000 and preferred shares that are redeemable for $440,000.
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 Ms. Samantha Shields is the sole shareholder of Shields Ltd. It is a Canadian controlled private corporation and its common shares have a fair market value of $920,000, an adjusted cost base (ACB)of $500,000, and a paid up capital (PUC)of $400,000. At this time, Shields Ltd. has no balance in its GRIP account. Ms. Shields exchanges all of her Shields Ltd. shares for cash of $480,000 and preferred shares that are redeemable for $440,000.
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.

Ms Samantha Shields Is the Sole Shareholder of Shields Ltd