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Hello,
I am a sole owner/ director of my corporation A. My corporation A own a house 100%.
If my corporation A gifted this house without any charge whatsoever to my sister who has nothing to do with my corporation, what would be the tax consequences for my corporation A and for my sister?
If my corporation A gifted this house without any charge whatsoever to a non-relative who has nothing to do with my corporation, what would be the tax consequences for my corporation A and for the non-relative?
Thanks!
Hi Paul,
When a taxpayer makes a gift of property / shares, the taxpayer is deemed to have 'sold' the property / shares for their fair market value at that time. This can trigger a capital gain. It does not matter if the recipient of the property / shares is a relative or a third party. Furthermore, the cost basis of the property / shares for the recipient is equal to the FMV of the property / shares on the date of the gift. The corporation does not record a gain or loss in this circumstance.