Chapter 8 slides

Chapter 8 slides - Chapter8 CapitalGains:TheFinerPoints

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Click to edit Master subtitle style Chapter 8 Capital Gains: The Finer Points 1
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2 `Capital Gains Looking at Division B, subdivision c Subdivision c is short subdivision Starts with s. 38 and ends with section 55
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3 Capital Receipt vs Income  Each situation must be examined in relation to  facts Taxpayer’s whole course of conduct looked at Intention of taxpayer examined – both primary and  secondary Then the badges of trade or behavioural factors  examined
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4 Capital Receipt vs Income  Badges of trade or behavioural factors Relation of transaction to taxpayer’s business nature of transaction nature of assets (fixed assets vs inventory) number and frequency of transactions length of period of ownership work done to make sale more likely or attractive reasons for disposition
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Taken when all or part of the proceeds on  disposition are due after the end of the year Amount of reserve is dependent on amount  of proceeds outstanding and the number of  years over which proceeds spread but this  amount cannot be > 5 years. At least 20% of the gain must be brought into  income each year. 5 Capital Gains Reserve
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6 Capital Gains - reserve Capital Gains Reserve 40(1)(a)(iii) is a lesser of  calculation. Lesser of: ) proceeds not yet due /total proceeds X gain ) 80% of gain in year 1   60% of gain in year 2      40% of gain in year 3    20% of gain in year 4
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Capital Gains Example: In 2009, Barry sells a capital property that had an  ACB of $300,000 for PofD of $450,000 and selling  costs of $10,000.  He receives $100,000 cash with  the balance to be repaid at the rate of $50,000  every January 1.  He receives the $50,000 on  January 1, 2010. How much of a reserve can Barry claim in 2009 
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Chapter 8 slides - Chapter8 CapitalGains:TheFinerPoints

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