Logo
Home Study Material Contact Search
AI Chat FREE
  1. business
  2. accounting
  3. pat is a shareholder in muddled thinking limited (

Pat is a shareholder in Muddled Thinking Limited (MTL) and owns 10 percent of the...

60.1K

Verified Solution

Question

Accounting

  1. Pat is a shareholder in Muddled Thinking Limited (MTL) and owns 10 percent of the companys shares. She has received an offer from MTL to repurchase some of her shares as part of a non pro rata cancellation of 16% of MTLs shares. Pat comes to you with several questions concerning this share cancellation. In the repurchase offer, MTL has advised that it has not made any prior share repurchases, and that an independent valuation of the shares places them at $1.50 per share.

Required

(a) In the offer documentation Pat reads about certain brightline tests? In draft letter format, provide Pat with a brief summary of these brightline tests. Explain your answer with reference to the Income Tax Act 2007.

(b) Also in your draft letter, advise Pat whether the proceeds she receives in return for the cancellation of her shares will be assessable income to her? Explain your answer with reference to the Income Tax Act 2007.

Answer & Explanation Solved by verified expert
Get Answers to Unlimited Questions

Join us to gain access to millions of questions and expert answers. Enjoy exclusive benefits tailored just for you!

Membership Benefits:
  • Unlimited Question Access with detailed Answers
  • Zin AI - 3 Million Words
  • 10 Dall-E 3 Images
  • 20 Plot Generations
  • Conversation with Dialogue Memory
  • No Ads, Ever!
  • Access to Our Best AI Platform: Flex AI - Your personal assistant for all your inquiries!
Become a Member

Other questions asked by students

Basic Math
1.2K views

et y 13 1 2 The distance is V 1 1 2 and V 5...

Finance
1.2K views

13. Explain the choices that a bank that holds large amounts of adjustable-rate mortgage loans outstanding...

Medical Sciences
1.2K views

Degeneration of neurons in which structure is primarily responsible for idiopathic Parkinson's disease? What is the...

Basic Math
1.2K views

Consider the following expression:5x2 +8Step 1 of 2: The given expression is a polynomial. Determine...

Calculus
1.2K views

Use Half Angle or Double Angle Formula to find f sin 5xdx You must show...

Algebra
1.2K views

Which of the following is the value of ?(4k+1)?(1) 53(2) 45(3) 37(4) 80

Accounting
1.2K views

Microsoft Dynamics GP Write off an Uncollectible accounts receivable Under the allowance method, the write...

Accounting
1.2K views

Exercise 6-1 (Algo) Variable and Absorption Costing Unit Product Costs (LO6-1) Ida Company...

Accounting
1.2K views

Ourboard Marina exchanged a boat with a cost of $20,000 (now 75% depreciated) for a...

Accounting
1.2K views

Boise, a division of Price Enterprises, currently performs computer services for various departments of the...

Accounting
1.2K views

Quart Company prepared the following sales budget: Month Budgeted Sales March April May June $200,000...

Finance
1.2K views

Westco Company issued 14-year bonds a year ago at a coupon rate of 8.6 percent....