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6 Henry is the owner of Les Habitants Inc. which is listed on the Toronto Stock Exchange. He is considering establishing a holding company. What statement is FALSE? O a) the dividends from Les Habitants Inc. would flow directly to the holding company on a tax-free basis Ob) the common shares of the holding company can also be owned by his wife, Karen, which creates opportunities for income splitting c) the lifetime capital gains exemption for shares of a small business would apply to a holding company if substantially all of its assets are Les Habitants shares. Od) Henry could have his shares in Les Habitants Inc. transferred to the holding company without triggering a capital gain

6 Henry is the owner of Les Habitants Inc. which is listed on the Toronto Stock Exchange. He is considering establishing a holding company. What statement is FALSE? O a) the dividends from Les Habitants Inc. would flow directly to the holding company on a tax-free basis Ob) the common shares of the holding company can also be owned by his wife, Karen, which creates opportunities for income splitting c) the lifetime capital gains exemption for shares of a small business would apply to a holding company if substantially all of its assets are Les Habitants shares. Od) Henry could have his shares in Les Habitants Inc. transferred to the holding company without triggering a capital gain

FINANCIAL ACCOUNTING
FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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H5.
go back to it. Henry is the owner of Les Habitants Inc. which is listed on the Toronto Stock Exchange. He is considering establishing a holding company. What statement is FALSE? O a) the dividends from Les Habitants Inc. would flow directly to the holding company on a tax-free basis O b) the common shares of the holding company can also be owned by his wife, Karen, which creates opportunities for income splitting Oc) the lifetime capital gains exemption for shares of a small business would apply to a holding company if substantially all of its assets are Les Habitants shares. d) Henry could have his shares in Les Habitants Inc. transferred to the holding company without triggering a capital gain
Transcribed Image Text:go back to it. Henry is the owner of Les Habitants Inc. which is listed on the Toronto Stock Exchange. He is considering establishing a holding company. What statement is FALSE? O a) the dividends from Les Habitants Inc. would flow directly to the holding company on a tax-free basis O b) the common shares of the holding company can also be owned by his wife, Karen, which creates opportunities for income splitting Oc) the lifetime capital gains exemption for shares of a small business would apply to a holding company if substantially all of its assets are Les Habitants shares. d) Henry could have his shares in Les Habitants Inc. transferred to the holding company without triggering a capital gain
7 Haroon borrowed $12,000 from his universal life insurance policy last year. As a result of the loan he had $8,000 of taxable income to report. If he repays $10,000 of the loan this year what will the tax consequences for Haroon and the policy be? a) Haroon will be able to claim a tax deduction of $8,000 and the ACB of the policy will be increased by $2,000. b) Haroon will be able to claim a tax deduction of $8,000 and the ACB of the policy will be increased by $10,000. c) Haroon will be able to claim a tax deduction of $8,000 and the ACB of the policy will be increased by $8,000. Od) Haroon will be able to claim no tax deduction but the ACB of the policy will be increased by $10,000.
Transcribed Image Text:7 Haroon borrowed $12,000 from his universal life insurance policy last year. As a result of the loan he had $8,000 of taxable income to report. If he repays $10,000 of the loan this year what will the tax consequences for Haroon and the policy be? a) Haroon will be able to claim a tax deduction of $8,000 and the ACB of the policy will be increased by $2,000. b) Haroon will be able to claim a tax deduction of $8,000 and the ACB of the policy will be increased by $10,000. c) Haroon will be able to claim a tax deduction of $8,000 and the ACB of the policy will be increased by $8,000. Od) Haroon will be able to claim no tax deduction but the ACB of the policy will be increased by $10,000.
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