Chapter 7,8,9,14

Chapter 7,8,9,14 - Chapter 7 Capital Gains defined as gains...

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Chapter 7 Capital Gains - defined as gains on disposal of capital property (assets) - capital assets are assets which are capable of earning income in the form of business profits, interest, dividends, rents or royalties Special Rules - Assets purchased before 1972 - Assets purchases after 1971 - Principal Residence - Personal Use Property - Listed Personal Property - Capital Gain Reserves Taxable Capital Gains is calculated as: Proceeds of Sale - Cost of asset sold = Capital Gain Taxable Capital Gain = 50% of Capital Gain ___________________________________________________ Allowable Capital Losses = 50% of Capital Loss - these can be applied against taxable capital gains Asset purchased before 1972 - there was no capital gains tax before 1972 - all assets owned at December 31, 1971 are valued at that date. This is called their V-day value. - for the sale of assets owned at December 31, 1971, there are two methods to calculate the capital gain. These are the median rule and the V-day valuation method. Median Rule - ACB of the asset sold is the middle value between cost, V-day value and proceeds. V-day Valuation Method - ACB of asset sold is the V-day value of the asset. Sale of Shares – after 1971 purchases Identical Properties : Cost of shares disposed of is determined by the weighted average cost method as follows: Royal Bank shares Date Purchased 1996 1000 shares @ $50 1998 900 shares @ $54 1999 1100 shares @ $55
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Calculation of cost: 1000 x $50 = 50,000 ACB = 159,100 900 x $54 = 48,600 3,000 1100 x $55 = 60,500 3000 shares 159,100 = $53.03 Royal Bank shares - 1200 shares sold in 2004 for $71/share Capital Gain Proceeds 1200 x $71 = 85,200 ACB 1200 x $53.03 = 63,636 Capital Gain 21,564 Taxable Capital Gain = 50% x 21,564 = 10,784 ACB of remaining shares 1800 @ $53.03 = $95,454 Principal Residence - definition - any accommodation which is ordinarily inhabited in the year by the taxpayer, a spouse, or former spouse, or a dependent child. -
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This note was uploaded on 12/31/2011 for the course ACCT 461 taught by Professor Patel during the Spring '09 term at Humber.

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Chapter 7,8,9,14 - Chapter 7 Capital Gains defined as gains...

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