Ch7 solution - AIT805 Chapter 7 Selected Problems and...

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Unformatted text preview: AIT805 Chapter 7 Selected Problems and Solutions: Capital Gains Solution 6 (Basic) (a) For identical properties acquired after 1971, the weighted moving average basis is to be used to calculate the ACB of each individual property (subsection 47(1)). HIGH GROWTH CO. D ATE S HARES P URCHASED S HARE P RICE A DJUSTED C OST B ASE ACB/S HARE Jan. 1/02 1,000 $3.00 $3,070 $3.07 Jun. 5/03 3,000 2.80 8,490 4,000 11,560 2.89 Aug. 5/03 1,500 3.80 5,770 5,500 17,330 3.15 Dec. 3/04 1,000 5.10 5,220 6,500 22,550 3.47 May 1/05 (3,000) 3.47 (10,410) Nov. 8/06 1,000 5.75 5,880 4,500 18,020 4.00 Jan. 9/07 (1,500) 4.00 (6,000) 3,000 $12,020 4.00 Note: The disposition of shares has no effect on the moving average cost. (b) HIGH RISK CO. ACB: Jan. 10/02 (20,000 $0.25) + $200 = $5,200 Jan. 14/02 ( 4,000 $0.80) + $ 75 = $3,275 Totals 24,000 shares $8,475 May 20/08: Proceeds $7,200 ACB (8,475) Broker Fees ( 150 ) Capital Loss $(1,425 ) Allowable Capital Loss $ (712.50 ) Solution 7 (Advanced) June 6, 1983: Proceeds of disposition (500 shares @ $2.75)........................................................................................ $ 1,375 ACB (500 shares @ $4.00 (1) )............................................................................................... $ 2,000 Commission........................................................................................................................ 50 (2,050) Capital loss (superficial loss (2) = $675)................................................................................................... Nil November 5, 2008: Proceeds of disposition (10,000 shares @ $7.50).................................................................................... $ 75,000 ACB (10,000 shares @ $2.434 (3) )........................................................................................ $ 24,340 Commission........................................................................................................................ 650 (24,990) Capital gain............................................................................................................................................. $ 50,010 Taxable capital gain 1 / 2 ............................................................................................................................ $ 25,005 NOTES TO SOLUTION (1) 1,000 shares @ $5.00............................................................................ $ 5,000 2,000 shares @ $3.50............................................................................ 7,000 3,000 $ 12,000 3,000 = $ 4.00 (2) Shares reacquired within 30 days. (3) 2,500 shares @ $4.00............................................................................ $10,000 superficial loss............................................................................ 675 2,000 shares @ $4.00............................................................................ 8,000 450 shares @ Nil (stock dividend).....................................................shares @ Nil (stock dividend)....
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This note was uploaded on 06/03/2009 for the course BUSINESS AIT 805 taught by Professor Shirenekhan during the Winter '09 term at Seneca.

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Ch7 solution - AIT805 Chapter 7 Selected Problems and...

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