capital

The 1,000 common shares of Canco (a Canadian-resident corporation), which had an aggregate fair market value (FMV) and stated capital of $1,000 and $100, respectively were owned equally by five shareholders, and an Israeli corporation held 100,000 preferred shares with an FMV and stated capital of $1,000,000 and $100, respectively, which were redeemed in its hands.

Mr. X's will provided a testamentary trust for Ms. X, who was entitled to all the income, with their children as the capital beneficiaries on her death. Ms. X chose not to receive all of the trust income, so that the undistributed income was taxed in the trust’s hands. In the event of her incapacity, Mr. X's will provided that expenses incurred by Ms.