Khensu Ahmed Incorporated a Small Canadian Controlled Private Corporation in 2018.The

question 11

Essay

Khensu Ahmed incorporated a small Canadian controlled private corporation in 2018.The company pays non-eligible dividends.The balance sheet for 2020 is as follows:
$\text { BALANCE SHEET, DEC. 31, } 2020$
$\begin{array}{|r|r|r|r|}\hline \text { Assets } & \$ 20,000 &\text { Share Capital } & \$ 3,000 \\\hline && \text { Retained Earnings } & \$ 17,000 \\\hline & \$ 20,000 && \$ 20,000\\\hline\end{array}$
A.Determine the tax that Khensu will realize as a shareholder if the company is sold.
B.Determine the tax that Khensu will realize as a shareholder if the corporation is wound up.

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Definitions:

Chapter 11

A provision of the United States Bankruptcy Code that permits businesses to reorganize their debts while continuing to operate.

Financial Institutions

Organizations that provide financial services, such as banks, insurance companies, and investment firms.

Chapter 11

A provision under the U.S. Bankruptcy Code that allows for business reorganization under court supervision while maintaining operations.

Chapter 7

A provision under the U.S. Bankruptcy Code allowing individuals or businesses to liquidate their assets to pay off creditors as part of a bankruptcy proceeding.