Amanda owns 1,000 shares of Bright Light Ltd. The ACB of the shares is $105 per share and the FMV is $156 per share in 2020 when she gifts 400 of the shares to her 12-year-old son and the remaining 600 shares to her spouse.

The shares pay eligible dividends of $4.50 per share in 2021. On December 31, 2021, both her son and her spouse sell all of their gifted shares for $142 each. Assume that Amanda does not opt out of the rollover of ITA 73(1).

REQUIRED

1. What are the income tax consequences of these transactions to Amanda, her son, and her spouse, in each of 2020 and 2021. If you conclude that there are no income tax consequences for any of the transactions for the individuals in a given year, state this clearly in your answer. [8 Marks]

2. Explain why adjustments were required, or not required, to Amandas proceeds of disposition or her son or spouses cost. [3 Marks]