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Unformatted text preview: 4561-411Lecture 4: Investments and Income from Property – Part I – last updated May 13, 2010 (no substantive changes)2ADMS Lectures 4 and 5 build on ADMS 3520 Lecture 3 to cover Income from Property (FIT Chapter 6). Lecture 4 covers some simple topics and rules ---- the major sources of property income for most taxpayers: interest, dividends, rental income and royalties. The most complex rules in Chapter 6 are also covered: these are the rules which apply to determine what costs are capitalized/deducted when rental or other buildings are built.Lecture 5 goes on to cover more complex topics: including non-arm’s length transfers and attribution (picking up some capital gains rules from FIT Chapter 8) and the deduction for interest expense. These lecture notes provide a list of the parts of Chapter 6 covered in each of Lectures 4 and 5. The material covered in Lectures 5 is highlighted in blue. The Lecture 5 notes contain a summary of the relevant sections.Readings ADMS 3520 Lecture 3 Notes: Income from Property (download from 4561 course website – under Course Materials -and bring)FIT Ch. 6 (as per below)Income Tax Act Sections Income Tax Act Sections 12, 16, 18, 20, 80.4, 80.5, 82(1), 121; IT-396R You must bring your Text and Act to each lecture.Recommend Chapter 6 Multiple choice questions 1, 2, 5; Exercises 1, 3, 4, 5(A); Review Question 1Problem Set: Chapter 6, Assignment Problem 2 (Mr. Wiser: Dividends vs. Interest)Chapter 6, Assignment Problem 10(John Investor: Various sources of Interest and Dividends). Do a tax calculation for this problem based on the information provided. Chapter 6, Multiple Choice 2 and Exercise 5(A) (Rental income and CCA restriction)Chapter 6, Problem 5 (BDC Distributing: Construction of a Building)Joanne Magee [[email protected]]4561-42You are expected to do the problems in the Problem Set before class and bring your solutions to class. Include section references in your solutions3Property Income Material in Lectures 4 and 5The second part the lecture will review the taxation of property income by taking up the remaining parts of the problem set. Most of the material relating to the types of property income we are looking at this week was covered in ADMS 3520 Lecture 3. In the ADMS 3520 Lecture 3 Notes we looked at what distinguishes “income from property” from “income from a business” and how income from property (interest, dividends, rents, royalties, and shareholder benefits) are taxed and what items are deductible. Subdivision b of Division B (sections 9 to 37) contains theses rules.Some of the material discussed next week (in Lecture 5) was covered in Lecture 5 of ADMS 3520.4¶ 6000 Property Income- Inclusions in IncomeThe remainder of these notes reviews the material in FIT Chapter 6 in the order that it appears in Chapter 6. Most of this material was taught in ADMS 3520 Lecture 3. New topics, topics discussed in Lectures 5 and 11, and items you are not responsible for are listed below....
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- Summer '10
- [email protected]], Joanne Magee, property income, ADMS 3520