CACC522-Week09-text

CACC522-Week09-text - CACC522Week09 Chapter9 P#3,8#3...

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CACC522-Week09 18:00 Chapter 9 P# 3,8 #3 1. Property Income - $1000, attributed to the mother because the daughter is a minor cannot transfer to a minor to transfer property earnings 2. Property Income – dividend (public) - $1000 eligible dividend Capital Gains – P of D 24000 ACB (20000) CG 4000 x 1/2 Dividend income 1000 x 1.44 = 1440 TCG – 2000 Tax Return Parent Student-20  yrs. Student  17yrs. Parent 1000x1.44=144 0 no 1440 yes 4000x1/2 =  2000 no 2000 yes If the parent charge interest to the student, then the underage student would declare the dividend  income. Without interest charge, the dividends are attributed to the parent Capital gains are always attributed to the owner of the property. Transfer of property happens at  fair market value. If the main reason for the property transfer is to divert income from parent to child, then the  attribution rules.
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3.  Property income Dividend 1000(public) o Eligible CG/CL – PofD – 26000 o ACB – 15000 (transfer is at ACB unless an election to transfer at FMV. She gifted the  shares, therefore transferred at 15000) GG – 26000 – 15000 = 11000 x  ½  - TCG = 5500 Dividend – 1000 x 1.44 = 1440 – attributed to wife CG – 5500 – attributed to wife 4.  Property income – net rental income - $7000 attributed to the husband’s tax return No fair market value consideration received for the property transfer ($60000 loan) o No interest on the loan for the  property purchase Part 2 60000 x 10%= 6000 interest expense o Wife – 7000 – 6000 = 1000 o husband $6000 interest earnings.
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