Mr. Jean Doyen owns 80 percent of the shares of Jondon Inc. His shares have an adjusted cost base (ACB)of $420,000. The remaining shares are held by his 19 year old son and his shares have an ACB of $105,000. The corporation is a Canadian controlled private corporation and its shares have a total fair market value of $3,360,000 and paid up capital (PUC)of $525,000. During 2020, Mr. Doyen exchanged all of his Jondon Inc. shares for cash of $630,000 and preferred shares that are redeemable for $1,680,000. At this time, Jondon Inc. has no balance in its GRIP account.
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 Mr. Jean Doyen owns 80 percent of the shares of Jondon Inc. His shares have an adjusted cost base (ACB)of $420,000. The remaining shares are held by his 19 year old son and his shares have an ACB of $105,000. The corporation is a Canadian controlled private corporation and its shares have a total fair market value of $3,360,000 and paid up capital (PUC)of $525,000. During 2020, Mr. Doyen exchanged all of his Jondon Inc. shares for cash of $630,000 and preferred shares that are redeemable for $1,680,000. At this time, Jondon Inc. has no balance in its GRIP account.
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.

Mr Jean Doyen Owns 80 Percent of the Shares of Jondon