Fortin Ltd. is winding up its operations. The Company has sold all of its assets and paid all of its liabilities, leaving a cash balance of $956,000. Since beginning operations, the Company has had a single shareholder who invested $120,000 to acquire all of its shares. The $120,000 is both the PUC and the adjusted cost base of the shares. All of the cash balance will be distributed to this shareholder. As the Company has a $45,000 balance in its capital dividend account, this amount will be treated as an ITA 83(2)capital dividend. What are the tax consequences of distributing the $956,000 to the corporation's only shareholder?

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The Answer of Fortin Ltd. is winding up its operations. The Company has sold all of its assets and paid all of its liabilities, leaving a cash balance of $956,000. Since beginning operations, the Company has had a single shareholder who invested $120,000 to acquire all of its shares. The $120,000 is both the PUC and the adjusted cost base of the shares. All of the cash balance will be distributed to this shareholder. As the Company has a $45,000 balance in its capital dividend account, this amount will be treated as an ITA 83(2)capital dividend. What are the tax consequences of distributing the $956,000 to the corporation's only shareholder?