Mr
Subject:SociologyPrice: Bought3
Mr. J, had passed away April 15, 2020, at age 66. Mrs. J is the executrix and has no income. Mr. J owned and operated a Canadian-controlled private corporation, ABC Ltd. Mr. J's 200 shares had an adjusted cost base and paid-up capital of $95,000. The fair market value of the shares at the date of death was $200,000. These shares are qualifying small business corporation (QSBC) shares.
Mr. J earned $16,000 per month in salary, which was paid by direct deposit on the last day of the month. A non-periodic bonus of $50,000 had been declared on March 15, 2020 but had not yet been paid at the time of his death. CPP of $2,898 has been, or will be, withheld on this income. He is not eligible for EI. In addition to his shares, Mr. J owned bonds with accrued interest of $1,900 in 2020 to the date of his death. Further, Mr. J had owned two rental properties. Net rental income before capital cost allowance was $4,000 for each month from January to April 2020, received on the last day of the month. Other Information: (1) Mr. J had earned income in 2019 of $95,000. He contributed to his RRSP the maximum amount allowed as a deduction on March 1, 2020. His RRSP was worth $295,000 at the time of his death. Mrs. J is the designated beneficiary of his RRSP. (2) His 2019 personal tax return was prepared but not filed at the time of his death. (3) Mr. J had not used any of his capital gains exemption. (4) All of Mr. J's assets have been left to his wife, except for the unit #2 rental property that is bequeathed to his 20-year-old daughter. (5) The rental properties had the following details: The rental properties had the following details:
#1 Unit #2 Unit
Land Building Land Building
FMV 100,00 100,000 180,000 90,000
Capital Cost 90,000 72,000 110,000 93,000
UCC 50,000 64,000
(1) identify the filing requirements for Mr. J;
(2) discuss the tax implications of deemed disposition of shares;
(3) explain the tax implications of deemed disposition of rental properties;
(4) prepare Mr. J's final return and Rights and Things returns (including federal and provincial taxes)
(5) Show all calculations and explain any unused information in your calculation
