Corporation a Is a Canadian Controlled Private Corporation and Corporation

question 6

Multiple Choice

Corporation A is a Canadian controlled private corporation and Corporation B is a public Canadian corporation.The paid-up capital of both corporations was established with $25,000 in common shares.Both corporations have a paid-up capital balance of $25,000.Which of these statements is true,provided the proper legal steps are followed?

• A) If the private corporation makes a payment of $25,000 to its shareholders by reducing its paid-up capital, there will be no tax consequence.
• B) If the private corporation makes a payment of $25,000 to its shareholders by reducing its paid-up capital, only 50% of the payment will be taxable.
• C) If the public corporation makes a payment of $25,000 to its shareholders by reducing its paid-up capital, there will be no tax consequence.
• D) If the public corporation makes a payment of $25,000 to its shareholders by reducing its paid-up capital, only 50% of the payment will be taxable.

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Definitions:

Electricity

The flow of electrons from a source of higher electrical potential to a source of lower electrical potential through a conductor.

12-Volt Circuit

An electrical pathway that operates at 12 volts, commonly found in automotive electrical systems.

6-Ohm Resistor

An electronic component that opposes the flow of electrical current, with a resistance value of six ohms.

Series

Refers to an electrical circuit configuration in which components are connected end-to-end, such that the current flows through each component in sequence.