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Lecture 5 - Solution to Self study 8-6

# Lecture 5 - Solution to Self study 8-6 - 26,825(260K 185K x...

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Self study problem 8-6 Facts: Taxpayer: Dr. Bolt Securities ACB 185,000 Spouse: Mr. Bolt FMV 225,000 Children: Dirk - age 20 (accrued TCG) 20,000 Dolly - age 15 2008 transfer to spouse/children 2009 Eligible dividends: 26,825 2010 sell for: 260,000 further TCG 17,500 2008 2009 2010 Case A (gift) Dr. Bolt (185K - 185K) x 1/2 - 26,825 (260K - 185K) x 1/2 37,500 Mr. Bolt ACB = 185K - - - Case B (sale at 225K, no election) Dr. Bolt (185K - 185K) x 1/2 - 26,825 (260K - 185K) x 1/2 37,500 Mr. Bolt ACB = 185K - - - Case C (sale at 225K, elect out of 73(1)) Dr. Bolt (225K - 185K) x 1/2 20,000 - - Mr. Bolt ACB = 225K - 26,825 (260K - 225K) x 1/2 17,500 Case D (sale at 140K, no election) Dr. Bolt (185K - 185K) x 1/2 -
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Unformatted text preview: 26,825 (260K - 185K) x 1/2 37,500 Mr. Bolt ACB = 185K- - - Case E (sale at 140K, elect out of 73(1)) Dr. Bolt (225K - 185K) x 1/2 20,000 26,825 (260K - 140K) x 1/2 60,000 Mr. Bolt ACB = 140K- - - - double tax on TCG of 42,500 (80K - 37.5K) in this case! Case F (gift to Dolly) Dr. Bolt (225K - 185K) x 1/2 20,000 26,825 - Dolly ACB = 225K- - (260K - 225K) x 1/2 17,500 Case G (FMV loan to Dolly to purchase shares) Dr. Bolt (225K - 185K) x 1/2 20,000 - - Dolly ACB = 225K- 26,825 (260K - 225K) x 1/2 17,500 Case H (int free loan to Dirk to purchase shares) Dr. Bolt (225K - 185K) x 1/2 20,000 26,825 - Dirk ACB = 225K- - (260K - 225K) x 1/2 17,500...
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