Tax - Ch7 Solutions

Tax - Ch7 Solutions - CHAPTER 7 INCOME FROM PROPERTY K C...

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CHAPTER 7 INCOME FROM PROPERTY KC 7-1 [ITA: 12(1)(c), 12(3), (4), (11) - Interest income] In both cases $1,236 of interest will be earned and received on the maturity of the bond on October 31, Year 3. Nov 1, Year 1 to Oct 31, Year 2 - $10,000 x 6% = $ 600 Nov 1, Year 2 to Oct 31, Year 3 - $10,600 x 6% = 636 $1,236 Timing of income recognition for tax purposes: Percel Ltd. Corporations must include interest income as it is earned on a daily basis [ITA 12(3)]. Year 1: Nov 1 to Dec 31 - $10,000 x 6% x 61/365 = $ 100 Year 2: Jan 1 to Oct 31 - $10,000 x 6% x 304/365 = $500 Nov 1 to Dec 31 - $10,600 x 6% x 61/365 = 106 606 Year 3: Jan 1 to Oct 31 - $10,600 x 6% x 304/365 = 530 $1236 Debra Individuals must include interest income on an annual accrual basis referred to as an anniversary day accrual [ITA 12(4)]. Interest earned to the anniversary day must be included. The first anniversary day in this case is October 31, Year 2 [ITA 12(11)]. The second anniversary day is October 31, Year 3, the maturity date in this case. Year 1:
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This note was uploaded on 12/28/2011 for the course TAX 101 taught by Professor Mcgregor during the Fall '07 term at Wisc La Crosse.

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Tax - Ch7 Solutions - CHAPTER 7 INCOME FROM PROPERTY K C...

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