Ms. Clarke is the sole shareholder of Magna Ltd., a CCPC that carries on a business of retailing high-end portable computer devices. Ms. Clarke had carried on the business as a sole proprietor for many years and incorporated the business in 2020. The business is very profitable and employs 25 people full-time. Indicate whether there may be a shareholder benefit in each of the following cases:

Required:

a. The company recently paid for two dental plans for the employees. The company pays premiums of both plans. The first plan covers all employees except for Ms. Clarke and costs the company $1,200 in annual premiums. The second plan is only available to Ms. Clarke and is much more comprehensive, with no deductible and very high coverage. Annual premiums are $15,000.

 

b. The company owns a vacation property in Florida that it purchased for public relations  purposes for use by its best customers. Ms. Clarke spent six weeks at the property for free.