Travis Lelulia is the sole shareholder of MPJ Computers Ltd., a corporation with an October 31 year-end. MPJ Computers Ltd. produces trivia games. Travis started the corporation with an initial capital investment of $30,000 for which he received 1,000 shares. Travis has let it be known that he wants to sell his business to enable him to build up a new tax consulting business. As a result, Travis has received two separate offers, both from individuals and both effective January 1, 2020. Offer One Mike Stapler is willing to pay $1,000,000 for the shares of MPJ Computers Ltd. Offer Two Sherri Reid is willing to buy the assets through an existing corporation that she owns. Sherris offer is as follows: Asset Offer Marketable securities $ 14,000 Accounts receivable 60,000 Inventory 254,000 Land 372,000 Building 330,000 Equipment 12,000 Goodwill 180,000 Total offer $1,222,000 You have been given the following additional information. 1. Details of the assets and liabilities of MPJ Computers Ltd. Assets Tax Value Cash $ 15,000 Marketable securities adjusted cost base 26,000 Accounts receivable $62,000 Less: allowance (6,000) 56,000 Inventory cost amount 230,000 Land adjusted cost base 144,000 Building UCC (capital cost is $235,000) 203,000 Equipment UCC (capital cost is $65,000) 22,000 Goodwill UCC Class 14.1 (cost is $38,000; acquired 2016) 20,500 Liabilities Trade payables 47,000 Bank loan 118,000 2. The paid-up capital of the outstanding shares in MPJ Computers Ltd. is $30,000. 3. The capital dividend account of MPJ Computers Ltd. is $94,000 before any sale of assets under the offer above. 4. The refundable dividend tax on hand balance of MPJ Computers Ltd. was $18,000 on October 31, 2019. 5. Travis and Sherri have agreed to file an election under section 22 of the Income Tax Act for the transfer of the accounts receivable should they eventually agree to a deal. 6. MPJ Computers Ltd. has the following tax rates: a) 13% on active business income up to the small business deduction limit (there are no associated companies) b) 40% on other income (before the 10% additional refundable tax on aggregate investment income and before the refundable Part I tax on investment income) The corporation will have a nil GRIP balance at the time of a winding-up. 7. Travis pays personal tax at the top marginal combined federal and provincial rate of 42.5% on actual dividends from the low-rate income of a CCPC and 50% on all other income. 8. Travis utilized all of his capital gains exemption on a previous sale of the shares of a qualified small business corporation. Required: a) If Travis sells the assets to Sherri and winds up MPJ Computers after the asset sale, what would be the net amount available for distribution to him after paying all liabilities? (18 marks) b) If the funds are distributed to Travis, determine the amount and nature of the components of the distribution to him for tax purposes. Also calculate the net proceeds after tax. (6 marks) c) Calculate the net proceeds after tax if Travis sells his shares in MPJ Computers to Mike. Which offer should Travis accept?