mc_q_11_13 - MULTIPLE CHOICE QUESTIONS Q11 A Jay is an...

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MULTIPLE CHOICE QUESTIONS Q11. A. Jay is an employee and 15% shareholder of Rick's Welding Shop Ltd. (Rick's). During the 2009 calendar year, A. Jay was having cash flow problems. Rick's gave A. Jay a loan of $5,000 on May 1, 2009 to help him out. Rick's also gave A. Jay's son, Jake, a loan of $2,000 on September 30, 2009 to help him meet expenses while at college. Rick's has said that A. Jay and Jake can repay the loans whenever they can afford it. The loans remain outstanding as at December 31, 2010. Rick's year end for accounting and taxation purposes is December 31. How much, and in which taxation year, is A. Jay required to include in his taxable income as a result of the above transactions? (a) $7,000 — 2009 (b) $7,000 — 2010 (c) $5,000 — 2009 (d) $5,000 — 2010 Q12. Mr. Johnson wants to help his daughter, Erin, save for her college education. To this end, in 2008, when she was 15 years old, he put $3,000 into a GIC in her name for a year. The GIC renews on an annual basis. On its maturity in 2009,
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Unformatted text preview: Erin rolled the $3,000 into a GIC for one year and the interest earned during the first year into a second GIC for $300. In 2010, the interest earned on the two GICs was $240 and $24, respectively. How much of this interest, if any, must Mr. Johnson report on his 2010 income tax return? (a) $264 (b) $240 (c) $24 (d) Nil Q13. Rayna owns three rental office buildings. She has asked you to advise her as to the maximum capital cost allowance she can claim on these properties for the 2010 year. All the buildings were purchased subsequent to 1987 but prior to 2007 and are of brick construction. Property 1 2 3 Original cost $1,500,000 $600,000 $160,000 UCC at January 1, 2010 1,225,000 500,000 150,000 2010 rental revenue 79,000 28,800 12,000 2010 expenses: Interest 45,000 18,000 9,000 Property taxes 15,000 6,400 1,800 Other 16,000 5,000 1,000 The maximum CCA that Rayna can claim on the rental properties for the 2010 year is: (a) $2,600 (b) $3,200 (c) $75,000 (d) Nil Page 1...
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  • Winter '11
  • GailDrory
  • Taxation in the United States, A. Jay

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