On January 1, 20x1, Dimitri Mishkin owns a group of shares with an adjusted cost base of $ 421165. None of these investments are eligiblefor the lifetime capital gains deduction. While these shares to not pay dividends, he expects that, during the coming year, their fair market valuewill increase to $ 643282. At that point he expects to sell the securities in order to put a down payment on a luxury lake cottage.

Dimitri has employment income in excess of $200,000 and, given this, any additional income will be taxed at a combined federal/provincialtax rate of 41 percent.Mr. Mishkin is trying to decide whether or not to transfer these securities into a corporation. The current combined federal/provincial tax ratefor investment income in his province is 48 2/3 percent.If he decides to transfer the shares to a corporation, what is the maximum amount that can be paid out as a tax free dividend (round to wholedollars)? Need explanation