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Part One: Multiple Choice in CAPS (10 questions, 1 mark each – TOTAL 10 marks) Question Answer 1. A – I am still intimidated by tax (nightmares sometime) 2. B – the net taxable capital gain for the year should not include the net capital loss carryforward (taxable income item) but would include the LPP carryforward - net taxable capital gains (part of NIFTP) = 50% x (\$2,850 – 820 – 240 – 105) = \$843 3. B – time value of money, we want to get the highest deduction upfront as the loss can be carryfoward 4. B – Since the Vancouver home was designated up to 2006. We only have 2007 to designate for the cottage, but since the Vancouver home has “1 +” we do not have to designate the entire period of ownership. So this leaves 2006 (or any other year) available to the cottage. So the cottage will have 80,000 x ((2 + 1) / 8) as the principal residence exemption. The capital gain after the exemption is \$50,000 and 50% is taxable = \$25,000. 5. A – Harry received the loan in 2007. The son’s loan will be the son’s shareholder loan benefit. 6. C – capital gain = \$300,000 – 170,000 – 10,000 = 120,000. Since not all the proceeds were received, we can take a capital gain reserve equal to the lesser of: (i) (280,000/300,000) x 120,000 = 112,000, and (ii) 4/5 x 120,000 = 96,000. So the minimum taxable capital gain = 50% x (120,000 – 96,000) = 12,000 7. B – remember that Anita is not a salesperson. Only deductible items are heat, hydro and maintenance 10% x (2,000 + 2,000 +1000) = \$500 8. C – with the current proceeds allocation, there would be a terminal loss on the building of UCC \$12,000 – LCOP \$0 = \$12,000. S. 13(21.1) will apply to reduce the terminal loss to \$0. This means that the deemed proceeds of the building will be \$12,000. So the land proceeds will be \$408,000. So the taxable capital gain = 50% x (408,000 – 80,000) 9.
• Winter '10
• TranCheung
• Taxation in the United States, taxable capital gain

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