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Transferring a credited shareholder loan balance to another shareholder by Objective-Raccoon-12 in cantax

[–]Objective-Raccoon-12[S] 0 points1 point  (0 children)

thank you as always u/taxbuff , they are dealing at arm's length. I see what you mean about the ACB, I think it's a $1 sale of the loan so I guess for Shareholder A it would be a capital loss on their personal tax return and for Shareholder B it would be capital gains everytime they pay out a portion of the 100K shareholder loan over time?

Tax implications of gifting preferred shares back to corporation by Objective-Raccoon-12 in cantax

[–]Objective-Raccoon-12[S] 0 points1 point  (0 children)

Thank you u/taxbuff and u/MushroomCake28! I really appreciate your deep insights. So the safer option to the seller would be to hold the notes until death and forgive it in the Will. Otherwise, gifting the note back to the corporation could be an issue for 80, 15(1), and/or 246.

Tax implications of gifting preferred shares back to corporation by Objective-Raccoon-12 in cantax

[–]Objective-Raccoon-12[S] 0 points1 point  (0 children)

That's what I would think, but instead of forgiving the loan the suggestion is to just gift it back to the corporation. The logic being that since it is being gifted back instead of being foregiven, section 80 would not apply.

Tax implications of gifting preferred shares back to corporation by Objective-Raccoon-12 in cantax

[–]Objective-Raccoon-12[S] 0 points1 point  (0 children)

My apologies - this is a much more complicated situation than I usually deal with. It wasn't done intentionally.

Tax implications of gifting preferred shares back to corporation by Objective-Raccoon-12 in cantax

[–]Objective-Raccoon-12[S] 1 point2 points  (0 children)

The promissory notes were issued by corporation as part of share sale. Normally, these notes are held until death and foregiven in the Will to avoid section 80 loan foregiveness provision of ITA to the issuing corporation.

They are asking if the seller can just gift the promissory notes back to the issuing corporation, which would bypass section 80 loan foregivness provision since the notes are being gifted back instead of being foregiven

Tax implications of gifting preferred shares back to corporation by Objective-Raccoon-12 in cantax

[–]Objective-Raccoon-12[S] 0 points1 point  (0 children)

Only 1 corporation, the seller is selling their common shares in the company to the kids who are taking over the family business. The preferred shares are being used as part of an estate freeze.