CapGains - ASSIGNMENT PROBLEMS CAPITAL GAINS PROBLEM 1 The...

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ASSIGNMENT PROBLEMS CAPITAL GAINS PROBLEM 1 The following dispositions were completed by Ms. Bailey during 20X6 and 20X7: 20X6 (a) Cottage — Proceeds $100,000. The cottage cost her $40,000 in 1986. The sales agreement specified that Ms. Bailey receive $50,000 in 20X6, and $25,000 in 20X7 and 20X8. (b) Stamp collection — Proceeds $20,000. Her records indicated that she paid $30,000 for the collection from 1984 to the date of the disposal. 20X7 (a) Fur coat — Proceeds $4,000. The coat cost $5,000 in 1994. (b) Yacht — Proceeds $60,000. The boat cost $40,000 in 1987. Ms. Bailey spent approximately $3,000 per year maintaining the boat. In 1994 she also spent $5,000 erecting a fishing platform on the deck. (c) 500 shares in ABC Corp. — Proceeds $15,000. These shares cost $17,000 in 1996. (d) Jewellery — Proceeds $80,000. These jewels were bequeathed to her in 1973 when her grandmother died. At that time they were valued at $35,000. (e) Antiques — Proceeds $1,800. Cost in 1975: $600. (f) Shares of Diversified Corp. Ltd. — Proceeds $25,000. These shares cost $21,000 in 1983. At the end of 20X5, Ms. Bailey had capital losses of $32,000 to carry forward to future years. REQUIRED: Compute Ms. Bailey’s 20X6 and 20X7 net taxable capital gain.
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SUGGESTED SOLUTION PROBLEM 1 20X6 Cottage: Proceeds of disposition $100,000 Adjusted cost base 40,000 $ 60,000 Reserve — lesser of: (i) $30,000, and (ii) 80% X $60,000 = $48,000 (30,000) Stamps (listed personal property): Proceeds of disposition $20,000 Adjusted cost base 30,000 Capital loss $10,000 Losses on LPP only deductible against LPP gains. Carry to 20X7. Capital gain 30,000 Deduct 20X5 capital loss (30,000 ) Net capital gain $
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CapGains - ASSIGNMENT PROBLEMS CAPITAL GAINS PROBLEM 1 The...

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