CapGains

# 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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## This note was uploaded on 01/07/2012 for the course ACCT 4453 taught by Professor Gorman during the Spring '11 term at Dalhousie.

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

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