CTP13_Chapter_11

Shares of other sbc copyright 2014 clarence byrd inc

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Unformatted text preview: ucted $50,000 in 2004 [(1/2))($100,000)] Deducted $28,500 in 2006 [(1/2)($57,000)] Copyright © 2014, Clarence Byrd Inc. 29 Canadian Tax Principles Maximum Deduction: Least Of • Annual Gains Limit (If no non-qualified capital gains) – Net Taxable Capital Gains For Year – Less: Net Capital Loss Carry Overs Deducted – Less: ABILs Realized During Year (Whether Or Not Less: Deducted) Deducted) Copyright © 2014, Clarence Byrd Inc. 30 Canadian Tax Principles Cumulative Net Investment Loss (CNIL) Additions • Property income (interest, rents, dividends) for individual or a partnership of which the individual is a specified member (limited partner) • Income from rental properties and leasing properties • Recapture on property, the income of which would be property income • One-half of the income that derives from the recapture of exploration and development expenses • Non-eligible portion of capital gains arising upon dispositions of non-qualifying real property Copyright © 2014, Clarence Byrd Inc. 31 Canadian Tax Principles Cumulative Net Investment Loss (CNIL) Deductions • Amounts deducted by the individual (including interest) in computing income from property • Losses from rental properties and leasing properties • Interest and other financing costs deducted in computing income from a limited partnership interest • Losses allocated to the individual by a limited partnership • One-half of amounts deducted for exploration and development expenses that have been allocated by a corporation (flow through shares) or an interest in a limited partnership • Net capital loss carry overs deducted against non-eligible portion of gains on non-qualifying real property Copyright © 2014, Clarence Byrd Inc. 32 Canadian Tax Principles Maximum Deduction: Least Of • Cumulative Gains Limit – The Sum Of All Annual Gains Limits After 1984 (No The Adjustments For Changing Inclusion Rates) Adjustments – Less: Capital Gains Deduction Claimed In Previous Years Less: (No Adjustments For Changing Inclusion Rates) (No – Less: CNIL Copyright © 2014, Clarence Byrd Inc. 33 Canadian Tax Principles Lifetime Capital Gains - Example An individual has a $20,000 taxable capital gain in 2013 on the disposition of shares in a qualified small business corporation. He deducted a taxable capital gain of $6,000 [(1/2)($12,000)] in 2007 and has a net capital loss carry forward from 2009 of $9,000 [(1/2)($18,000)] which he deducts in 2013. • Unused portion of deduction ($375,000 - $6,000) = $369,000 • Annual gains limit ($20,000 - $9,000) = $11,000 • Cumulative gains limit ($6,000 + $11,000 - $6,000) = $11,000 Copyright © 2014, Clarence Byrd Inc. 34 Canadian Tax Principles Ordering of Deductions And Losses • Significance Of Ordering • Deductions May Be Lost If Not Used – Example: Spousal Support – Example: Child Care Costs Copyright © 2014, Clarence Byrd Inc. 35 Canadian Tax Principles Ordering of Deductions And Losses • Ordering Rules Ordering...
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