Capital Gains and Losses

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Are the gains on non-arms length sale of common shares in a…

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Are the gains on...

Are the gains on non-arms length sale of common shares in a private company taxable as capital gains?

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The Uncle sold his shares (49% of all O/S shares) to his nephew for again of $49,000. on January 31, 2017 in Alberta. The shares are in a construction company. The other 51% of the o/s shares are all owned by the nephew's father.

Submitted: 8 months ago.Category: Capital Gains and Losses
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Answered in 16 minutes by:
10/17/2017
Tax Expert: levr, Tax Advisor replied 8 months ago
levr
levr, Tax Advisor
Category: Capital Gains and Losses
Satisfied Customers: 32,985
Experience: Working for a large tax preparation service
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We need to verify if such sale is classified as a sale to a related party...

In this case a “bargain” element on such sale would be classified as a gift and will trigger gift tax obligations.

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Tax Expert: levr, Tax Advisor replied 8 months ago

Otherwise of the gain realized on the sale of a depreciable property might be treated as ordinary income.

Because shares are not depreciable - the gain will be long term capital gain assuming shared were held more than a year.

Let me know if you need any further help.

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