Falcon Bay Private Ltd. has a verified Capital Dividend Acco…
Falcon Bay Private Ltd. has a verified Capital Dividend Account balance of $90,000. Its directors declare a single dividend of $130,000 payable to the sole Canadian-resident shareholder. Before any amount is paid, the corporation prepares Form T2054 electing to treat only $90,000 of the declared dividend as a capital dividend and intends to report the remaining $40,000 as an ordinary taxable dividend. Which statement correctly describes the proposed treatment?