Tax - Ch8 Solutions

# Tax - Ch8 Solutions - CHAPTER 8 GAINS AND LOSSES ON THE...

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CHAPTER 8 GAINS AND LOSSES ON THE DISPOSITION OF CAPITAL PROPERTY—CAPITAL GAINS Solutions to Key Concept Questions KC 8-1 [ITA: 40(1)(iii) – Capital gains reserve] The minimum taxable capital gain to be reported is \$50,000 in 20X1, \$30,000 in 20X2 and \$40,000 in 20X3. (20X1) Proceeds \$600,000 ACB (176,000) Selling costs (24,000 ) Gain 400,000 Capital gains reserve – lesser of: \$450,000/600,000 x \$400,000 = \$300,000 4/5 x \$400,000 = \$320,000 (300,000 ) Capital gain \$100,000 Taxable capital gain \$ 50,000 (20X2) Gain (20X1 reserve) \$300,000 Capital gains reserve – lesser of: \$400,000/600,000 x \$400,000 = \$266,667 3/5 x \$400,000 = \$240,000 (240,000 ) Capital gain \$ 60,000 Taxable capital gain \$ 30,000 (20X3) Gain (20X2 reserve) \$240,000 Capital gains reserve – lesser of: \$350,000/600,000 x \$400,000 = \$233,333 2/5 x \$400,000 = \$160,000 (160,000 ) Capital gain \$ 80,000 Taxable capital gain \$ 40,000

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KC 8-4 [ITA: 20(16), 39(1)(b)(i), 40(2)(g), 40(3.3),(3.4), 53(1)(f), 54 – Capital losses denied]
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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 - Ch8 Solutions - CHAPTER 8 GAINS AND LOSSES ON THE...

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