4561 Summer 2010 midterm 1 solution Q3

4561 Summer 2010 midterm 1 solution Q3 - $2,500 on these...

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Question 3 (10 marks; suggested time 17 minutes) YOU MUST ANSWER QUESTION 3 ON THIS ANSWER SHEET IN THE CHART BELOW. ANSWERS WILL NOT BE MARKED ELSEWHERE . In the first column, provide the answer to the corresponding question. In the second column, provide the section, subsection, or paragraph of the Income Tax Act, whichever is most relevant, in support of your answer. Calculations or explanations are not necessary and will not count towards the marks. Each independent question is worth two marks. There is no penalty for incorrect answers. Question Answer Income Tax Act Reference 1. In 2009 I sold some mutual funds to my spouse for $10,000 when their fair market value was $15,000. My cost of the mutual funds was $7,000. No election was made. What are my proceeds of disposition? Nil Subsection 73(1) 2. I gave my 16 year-old daughter shares in my private company. On 2009 she received non-eligible dividends of
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Unformatted text preview: $2,500 on these shares. What amount do I include in my 2009 income? Nil Subsection 74.5(13) 3. I am a non-resident of Canada and I own a rental property located in Ontario. I can choose to file a Canadian tax return to report my Canadian source rental income on a net basis. True or false? True Subsection 216(1) 4. I loaned my 22 year-old son $100,000 for investment purposes in order to reduced my income and allow him to earn income to use his tuition credits. He earned $6,000 of eligible dividends on these loaned funds in 2009. How much income should my son report in 2009 in respect of these investments? Nil Subsection 56(4.1) 5. I am a Canadian resident and own shares in US companies with a total cost of CDN $125,000. I am required to report these investments to the Canada Revenue Agency – true or false? True Section 233.3 Summer 2010 – ADMS 4561 Midterm #1 Page 1 of 1...
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