Spencer Stable owns 50% of the outstanding shares of Stable Estates Ltd. His sister, Tracy,...
90.2K
Verified Solution
Link Copied!
Question
Finance
Spencer Stable owns 50% of the outstanding shares of Stable Estates Ltd. His sister, Tracy, owns the other 50%. During the winter months, the company's construction activities are rather slow so Spencer uses this time to design new homes for the spring. At the beginning of January, to keep the company's largest subcontractor busy over the long winter months, he asked the subcontractor to build an addition to his cottage so that he can use it to entertain guests. The bookkeeper of Stable Estates Ltd. has expensed the $40,000 invoice from the subcontractor. Spencer had told the bookkeeper to treat the invoice as a business expense.
Required:
If the CRA were to discover this transaction during its audit, what would they do about this transaction?
Why, and what are the tax consequences?
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!
