After selling its assets and paying all of its liabilities, a corporation has cash of $1,237,000 available for distribution to its only shareholder. The corporation was established 12 years ago with an investment of $189,000. This figure is both the PUC and the adjusted cost base of the shares. The balance in the capital dividend account is $146,000 and the company makes the appropriate election to have the distribution of this amount be treated as a capital dividend under ITA 83(2). What are the tax consequences of distributing the $1,237,000 to the corporation's only shareholder?

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The Answer of After selling its assets and paying all of its liabilities, a corporation has cash of $1,237,000 available for distribution to its only shareholder. The corporation was established 12 years ago with an investment of $189,000. This figure is both the PUC and the adjusted cost base of the shares. The balance in the capital dividend account is $146,000 and the company makes the appropriate election to have the distribution of this amount be treated as a capital dividend under ITA 83(2). What are the tax consequences of distributing the $1,237,000 to the corporation's only shareholder?

After Selling Its Assets and Paying All of Its Liabilities