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Johnny Moneybags owns 100% of the voting common shares Gaming Ltd. Gaming Ltd. was at one time a leader in the casino industry. Johnny purchased

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Johnny Moneybags owns 100% of the voting common shares Gaming Ltd. Gaming Ltd. was at one time a leader in the casino industry. Johnny purchased the shares from his Uncle Guido in 2010 at a cost of $600,000, the fair market value at the time. The shares at that time had a paid-up capital of $20,000. By 2020, Johnny realized that he could no longer finance the losses from his gaming company and sold 100% of his shares of Gaming Ltd. to Rich Enterprises Lid. a large gaming enterprise controlled by his Common-Law-Partner for $1,000,000 cash, which represented the fair market value of his shares. Additional information: Gaming Lid. and Rich Enterprises Lid. are Canadian Controlled Private Corporations. Johnny is a resident of Canada Johnny has never claimed the capital gains deduction, has no cumulative net investment loss, and has never incurred a business investment loss. REQUIRED; 1) Outline the tax consequences associated with the non-arm's length transfer of shares to Rich Enterprises Lid. Show all calculations to justify your answer. (7 marks) 2) Describe how you would revise the consideration issued in this transaction to improve Johnny's tax position. No calculations are required

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