Spencer's accountant has prepared the following information to assist Spencer in determining how

much he will have remaining once the company makes its final distribution to him. The properties

will all be sold in the first half of December $2022$ at the FMVs indicated on the statement of net

assets shown below. The company is formally dissolved and wound up on December $31,2022.$

Assume that net active business income from ongoing operations throughout $2022$ is $$410,000$

and that taxable capital gains are $$62,700$ without considering the effect of the sale of the company

properties. The company did not receive any dividends on any of its investments and therefore was

not liable to any Part IV tax.

Based on tax costs, the components of the net asset tax cost balance sheet are as follows:

Other Information:

The tax costs shown for each of class $1,8,$ and $50$ are the undepreciated capital cost $($UCC$)$ as

of January $1,2022.$

The capital cost of the building is $$3,800,000,$ the office furniture $$537,000,$ and the computers

$$600,000.$

Since all of the depreciable properties are sold prior to the final taxation year end as a result of

the dissolution on December $31,2022,$ no CCA can be claimed for $2022.$

The investment in a private company is for an arm's$-$length CCPC that qualifies as a small busi$-$

ness corporation.

The ACB of the common shares is $$501,000$ as a result of a capital gains crystallization transac$-$

tion a few years earlier.

On January $1,2022,$ the company has a balance in its GRIP account of $$74,500.$

The provincial corporate income tax rate on income that qualifies for the small business deduc$-$

tion $($SBD$)$ is $2\%$ and is $12\%$ on all other income, including investment income and taxable

capital gains.

The January $1,2022,$ balance in the company's eligible RDTOH is $$76,700,$ while the balance

in the non$-$eligible RDTOH is $$194,500$

Assume that the CDA balance of $$10,000$ has already been adjusted for the $$62,700$ of taxable

capital gains realized in the year prior to the sale of all of the company's assets.

The company has no non$-$capital losses but has a $2020$ net capital loss balance of $$71,000$ at

the beginning of $2022.$

$11.$ No dividends $($taxable or capital$)$ were paid during the previous two years.

$12.$ Assume that there are no reductions to the small business limit for adjusted aggregate investment income $($AAII$)$ or taxable capital employed in Canada $($TCEC$).$

$13.$ No ITA $22$ election was filed for the sale of the accounts receivables.

Required:

A$.$ Calculate the amount that will be available for distribution to Spencer after the sale of all of the company's assets $($properties$).$ This will require calculating the company's net income and taxable income, federal and provincial income taxes payable, RDTOH account balances including any eligible and non$-$eligible dividend refund$($s$),$ the CDA, and the GRIP balance. Show all supporting calculations.

B$.$ Determine the eligible and non$-$eligible dividend and capital gain components of the distribution to Spencer that will accrue as a result of the winding$-$up of Hoxey Ltd$.$ Ignore the possibility that Spencer might be subiect to the alternative minimum tax $($AMT$).$ Assume that all appropriate elections, designations, and filings will be made on a timely basis to minimize his personal income taxes.

C$.$ Determine Spencer's net personal income tax on the taxable dividends received after considering federal and provincial dividend tax credits. Assume that $(1)$ Spencer is subject to the highest federal income tax rate of $33\%$ and the highest Saskatchewan rate of $14\mathrm{.}5\%$ and $(2)$ that the provincial dividend tax credit on eligible dividends equals $40\%$ of the gross up and is equal to $26\%$ of the gross up on non$-$eligible dividends.