Hayden owns 100% of the shares of ABC Co. Hayden's spouse owns 100% of the shares of XYZ Co. The shares of ABC Co. are valued at $50,000 with an ACB and PUC of $1000. The couple is planning for XYZ Co. to pay Hayden $50,000 in cash for the shares in ABC Co. Which of the following will result from this sale?

Multiple Choice

• Hayden will recognize a capital gain of $49,000.
• Hayden will recognize a capital gain of $50,000.
• Hayden will recognize a deemed dividend of $49,000 and a capital gain of $0.
• Hayden will recognize a deemed dividend of $50,000 and a capital gain of $0.