Assume a corporation winds up its operationsand is left with cash on hand of$1,700,000 to distribute to shareholders. Thecorporation has a capital dividend account of$325,000 and PUC of $300,000.The corporation has one shareholder, whoholds 32,000 shares with an adjusted costbase of $240,000. How will the proceeds betaxed to the shareholder?Choose the correct answer.A.Taxable dividend of$1,400,000& capital gain of $60,000В.Taxable capital gain of $835,000C.Taxable dividend of$1,075,000& taxable capital gain of $30,000D.Taxable capital gain of $240,000

Solution- Total distribution= 1700000 Capital dividend account =325000 Thus total taxable income…

Answered: Assume a corporation winds up its…

Assume a corporation winds up its operations and is left with cash on hand of $1,700,000 to distribute to shareholders. The corporation has a capital dividend account of $325,000 and PUC of $300,000.

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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Question

Assume a corporation winds up its operations
and is left with cash on hand of
$1,700,000 to distribute to shareholders. The
corporation has a capital dividend account of
$325,000 and PUC of $300,000.
The corporation has one shareholder, who
holds 32,000 shares with an adjusted cost
base of $240,000. How will the proceeds be
taxed to the shareholder?
Choose the correct answer.
A.Taxable dividend of
$1,400,000
& capital gain of $60,000
В.
Taxable capital gain of $835,000
C.Taxable dividend of
$1,075,000
& taxable capital gain of $30,000
D.
Taxable capital gain of $240,000

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