On November 23, 2019, Victoria Ltd. acquired 20 percent of the 15,000 issued shares of Vancouver Ltd. at a cost of $32.50 per share. On December 20, 2019, these shares paid a dividend of $2.25 per share, and on August 15, 2020, Victoria sells the shares for $29 per share. What is the amount of the capital loss on the Vancouver Ltd. shares for Victoria Ltd. for the taxation year ended August 31, 2020?

Question

Quizplus · Accepted Answer

Victoria Ltd. acquired 20% x 15,000 shares = 3,000 shares at a cost of $32.50 per share, for a total cost of $97,500. 
On December 20, 2019, Victoria received a dividend of $2.25 per share, for a total dividend of 3,000 shares x $2.25 per share = $6,750. 
On August 15, 2020, Victoria sold the shares for $29 per share, for a total sales price of 3,000 shares x $29 per share = $87,000. 
The capital loss is calculated as follows: 
Proceeds of disposition = $87,000 
Adjusted cost base = $97,500 - $6,750 (dividend received) = $90,750 
Capital loss = $90,750 - $87,000 = $3,750.

Therefore, the answer is B.