Pearl Inc. is a Canadian-controlled private corporation (CCPC) that owns 100% of the voting shares of Oyster Ltd. and 25% of the voting shares of Shell Corp. The fair market value of the Shell Corp. shares owned by Pearl Inc. is equal to 25% of the fair market value of all Shell Corp. shares. In the current year, Pearl Inc. received the following dividends: Eligible dividends from various portfolio investments $ 7,500 Non-eligible dividends from Oyster Ltd. $30,200 Non-eligible dividends from Shell Corp. $12,750 As a result of paying the $30,200 dividend, Oyster Ltd. received a dividend refund of $7,550. Shell Corp. received no dividend refund for its dividend payment. Which of the following is the correct amount of Part IV tax payable by Pearl Inc. as a result of receiving these dividends?
Pearl Inc. is a Canadian-controlled private corporation (CCPC) that owns 100% of the voting shares of Oyster Ltd. and 25% of the voting shares of Shell Corp. The fair market value of the Shell Corp. shares owned by Pearl Inc. is equal to 25% of the fair market value of all Shell Corp. shares. In the current year, Pearl Inc. received the following dividends:
Eligible dividends from various portfolio investments $ 7,500
Non-eligible dividends from Oyster Ltd. $30,200
Non-eligible dividends from Shell Corp. $12,750
As a result of paying the $30,200 dividend, Oyster Ltd. received a dividend refund of $7,550. Shell Corp. received no dividend refund for its dividend payment. Which of the following is the correct amount of Part IV tax payable by Pearl Inc. as a result of receiving these dividends?
Correct answer is $10,425. (please explain how).
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