Question $4$

$2$ pts

Mr$.$ Smith owns $500$ IBM shares with an ACB of $$7$ a share. Mr$.$ Smith wishes to gift to his son who is

$15$ years old on January $1^{st},2023.$ The FMV at the time was $$10$ a share. The shares paid a dividend

in each year of $$1,000.$ Five years later the son sold the shares on the open market for $$16$ a share.

What are the tax consequences?

The capital gain of $($$$16-$$$7=$$$9500=$$$4,500)$ when the shares are sold will not be attributed back to $Mr.$

Smith but dividend received from the share each year will be attributed back to Mr$.$ Smith until the year in

which the son turns $18$ years of age

The capital gain $($$$16-$$$10=$$$6500=$$$3,000)$ when the shares are sold will not be attributed back to Mr$.$

Smith but dividend received from the share will be attributed back to Mr$.$ Smith each year until the son sells

the shares

The capital gain $($$$16-$$$10=$$$6500=$$$3,000)$ when the shares are sold will not be attributed back to Mr$.$

Smith but dividend received from the shares will be attributed back to Mr$.$ Smith each year until the year in

which the son turns $18$ years of age

The capital gain $($$$16-$$$10=$$$6500=$$$3,000)$ when the shares are sold will be attributed back to Mr$.$ Smith

including the dividend each year received from the shares