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Unformatted text preview: 4561-711AK/ADMS 4561 - PERSONAL TAX Lecture 7 Investments and Capital Gains and Losses - Part II last updated June 15, 2010 (no changes)These notes follow the ordering of topics in FIT Chapter 8. You are only responsible for what is in these notes, the problem material assigned and the examples taken up in class. The major topics are: Various Capital Gains Provisions 8,000Foreign Exchange Gains & Losses 8,010Part Dispositions 8,020Exchanges of Property 8,030 and Election for additional deferral8,040Proceeds of Disposition on a Building 13(21.1) 8,050Election on Change in use 8,060Principal Residence Revisited 8,070Leaving and Entering Canada covered in Lecture 2 8,100Options - ignore 8,110Debts Established to be bad debts (s. 50) 8,120Convertible properties 8,130Capital Gains Deferral - ignore 8,140Certain Shares deemed to be capital property 54.2 8,150Non-arm's length transfers and attribution rules covered in Lecture 5 8,200Death of a Taxpayer 8,300Deemed Disposition on Death 8,310Income Reconciliation Revisited skip 8,400ReadingsFIT Ch. 8: With sections omitted as per notesIncome Tax Act Sections 3, 38-54.2, 70 (as per notes) RecommendChapter 8 Exercises 1, 3 and Multiple Choice Questions 1, 5, 6Problem Set 7: Chapter 7, Problem 4 (Sherman Stockwatcher) and 8 (Ms Plummet) on Stock TransactionsChapter 8, Problem 9 (Mary McArthur) on DeathJoanne Magee [firstname.lastname@example.org]4561-722Foreign Exchange Gains & Losses 8,010 (Exercise 1)TO COMPUTE CAPITAL GAINS AND LOSSES, THE ACB AND PROCEEDS ON FOREIGN SECURITIES MUST BE CONVERTED TO CANADIAN DOLLARS (on the day of the purchase/sale)- E.g., If shares or a Florida condominium was purchased for $100,000 U.S on March 1, 1994 and sold for $100,000 U.S. on February 1 of this year, you would have to find out the Cdn/U.S. foreign exchange rate at the date of purchase at the date of sale to determine the capital gain or loss for Canadian tax purposes. GAINS AND LOSSES FROM THE HOLDING OF FOREIGN CURRENCY UNDER $200 DO NOT NEED TO BE REPORTED s. 39(2)- E.g., If you have U.S. dollars in a bank account and the Canadian dollar goes down in value (from when you bought the U.S. dollars) and you sell your U.S. dollars to buy Canadian dollars, then you will have a foreign currency gain. The first $200 of foreign currency gains (or losses) per year is deemed to be nil (i.e., zero). 2.1Part Dispositions 8,020: s. 43If you dispose of part of a property (e.g., 50% of a parcel of real estate), you must allocate a reasonableamount of the cost to the portion sold What is a reasonable portion of the cost? 50% of the original cost? Not necessarily. For example, the road or water frontage of a particular property (or the part with the swamp!) might be more (or less) valuable than the rest of the property....
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This note was uploaded on 08/10/2010 for the course LAPS 4561 taught by Professor Frankovic during the Summer '10 term at York University.
- Summer '10