Transfer to spouse. Your client Brenda owns shares of ABC Co. that have a FMV of $175,000 and an ACB of $110,000. They wish to transfer the shares to their spouse Mikhail. Their investment advisor predicts that the value of the shares will grow to $250,000 in the next two years. The total dividends after the transfer would be $12,000.

Required: For each of the following scenarios, explain the tax implications to your client Brenda and her spouse Mikhail. This will include the i) ACBs, ii) income to be included (gains), and any iii) attribution of dividends and future gains from the sale of the shares (assuming they are subsequently sold by the spouse for $250,000.

• Scenario 1: Client sells their shares to their spouse for cash of $175,000 and does not elect out of ITA 73(1).
• Scenario 2: Client sells their shares to their spouse for cash of $175,000 and elects out of ITA 73(1).
• Scenario 3: Client sells their shares to their spouse for cash of $195,000 and elects out of ITA 73(1).

		Impact to Brenda	Impact to Mikhail
Scenario 1: Sell for $175,000 and does not elect out of 73(1)	Income (gain) to record on date of transfer
	New ACB of shares
	Dividend income
	Income (gain) from future sale of shares
Scenario 2: Sell for $175,000 and elects out of 73(1)	Income (gain) to record on date of transfer
	New ACB of shares
	Dividend income
	Income (gain) from future sale of shares
Scenario 1: Sell for $195,000 and elects out of 73(1)	Income (gain) to record on date of transfer
	New ACB of shares
	Dividend income
	Income (gain) from future sale of shares

*Make sure you put your response in the correct box; not all are applicable.

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