BUSI 2400 Lecture 5: 7-7
24 Jan 2016
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Solution 7: non-arm"s length transactions, attribution: sell the shares to her husband for cash of ,000. When he disposes of the shares, any capital gain or loss will be attributed back to katie, since they did not elect out of the rollover. A non-interest bearing note for ,000 has a fair market value of less than its face value. Her husband receives the shares at an acb of ,000. Since there was no interest charged on the note, any capital gain or loss on the sale of these shares by her husband will be attributed back to katie. Since there was no interest charged on the note, any dividends received on the shares will be attributed back to katie as well: sell the shares to her husband for cash of ,000. Automatic rollover proceeds = acb no gain or loss to katie. Her husband receives the shares at an acb of ,000.
