Cole Cane owned 100,000 shares of ABC Ltd., a publicly traded Canadian corporation. These shares, including brokerage fees, were acquired at a cost of $ 500,000. Based on current trading values, these shares are now worth $ 800,000.

The following four cases make different assumptions as to the identity of the purchaser, the circumstances of the sale, and the proceeds of disposition. In each case, assume that the purchaser immediately resold the shares for their fair market value of $ 800,000.

Case 1: Cole Cane sold the shares to his brother for $ 300,000 to create a loss, as Cole Cane had realized significant capital gains during the current year. Since his brother had no other source of income, Coles brother would be taxed on the gain from the resale at the minimum federal rate.

Case 2: Cole Canes mother had realized a large amount of capital gains during the current year. To help his mother, Cole Cane sold the shares to her for $ 2,000,000. Coles mother planned to use the loss on the immediate resale to offset her capital gains.

Case 3: Because Cole Cane needed funds to acquire a house for his grandmother, he sold the shares to an arms length party for $ 800,000.

Case 4: Cole Cane gifted the shares to his 17-year-old daughter.

Required

For each of the cases, advise Cole Cane of the tax consequences that will result from the disposition, and indicate the tax consequences to the purchaser of the shares when they are resold. In addition, in cases 1 and 2, indicate whether the stated tax planning objective was achieved.

Canadian Income tax 1 from the book 2021-2022