Chapter10Solutions

Chapter10Solutions - Chapter 10 - Solution 1 Employment...

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Unformatted text preview: Chapter 10 - Solution 1 Employment income per T4s ............................................................................. $ 72,000 ssec. 7(1) benefit (1) ........................................................... Nil interest benefit on loan [ssec. 80.4(1)] (2) .......................... 1,764 $ 73,764 Property income Interest net of carrying charges (3) ............................................. 4,000 Par. 3( a ).................................................................................................................... $ 77,764 Taxable capital gains (4) [par. 3( b )]............................................................................ 4,950 Par. 3( c ) and total Division B income ...................................................................... $ 82,714 Division C deductions: Par. 110(1)( d ) Employee stock option deduction (5) ..................................................................... $ Nil Par. 110(1)( j ) Home relocation loan deduction (6) ....................................................................... 441 Par. 111(1)( b ) Net capital losses (7) .............................................................................................. 4,950 Par. 111(1)( a ) Non-capital losses (8) ............................................................................................. 67,394 Total Division C deductions.......................................................................................................... $ 72,785 Taxable income (equal to personal and employment tax credit bases: $8,929 + $1,000).............. $ 9,929 NOTES TO SOLUTION (1) Since the shares are listed and their value at the grant date was less than $100,000, the employment benefit of $12,000 (i.e., 2000 shares ($10 $4)) may, with an election, be included when the shares are disposed of. (2) Interest on all loans subject to subsection 80.4(1) computed at the prescribed rate on each loan and debt for the period in the year during which it was outstanding (less amounts actually paid, if applicable). [$100,000 92 days/365 7%] (3) Property income is equal to the property income earned less the expenses incurred to earn the property income. [$5,000 $1,000] (4) Taxable capital gain = 1 / 2 of the capital gain. [$9,900 1 / 2 ] (5) Since the stock option benefit is deferred, so is the deduction, until the benefit is included. Deduction [par. 110(1)( d )] will be equal to 1 / 2 of the benefit inclusion [ssec. 7(1)], since exercise price is greater than or equal to the fair market value on the grant date. ( 1 / 2 $12,000) (6) Where a taxpayer has included an amount in income in respect of a home relocation loan [sec. 80.4], the home relocation loan deduction in Division C is equal to the least of: (a) the amount of the benefit under sec. 80.4 if that section had applied only to the home relocation loan ................................................................................................................. relocation loan ....
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This note was uploaded on 09/30/2008 for the course ACCT 360 taught by Professor Jones during the Summer '08 term at Windsor.

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Chapter10Solutions - Chapter 10 - Solution 1 Employment...

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