question archive You were preparing your client list with respect to the personal tax return preparation season in February
Subject:AccountingPrice: Bought3
You were preparing your client list with respect to the personal tax return preparation season in February. You were told by Mrs. J that her husband, Mr. 1, had passed away April 15, 2020, at age 66. Mrs. J is the executrix and has no income. Mr. I 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 {QSEC} shares. Mr. I 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 $2,393 has been, or will be, withheld on this income. He is not eligible for E1. In addition to his shares, Mr. I 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. altar Infomot‘fon: {1] Mr. J had earned income in 2019 of $95,000. He contributed to his RESP 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 bene?ciary of his RESP. {2) His 2019 personal tax return was pmpared but not ?led at the tiine 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 Fair market value $100,000 $100,000 $130,000 $90,000 Capital cost 90,000 12,001} 110,000 93,001) [ICC some 64,000
The rental properties had the following details: #1 Unit #2 Unit Land Building Land Building Fair market value $100,000 $100,000 $130,000 $90,000 Capital cost 90,000 72,000 110,000 93,000 [ICC some 64,000 2 You are asked to use the above information to {1) identify the ?ling mqunments for Mr. J; (6%} {2) discuss the tax implications of deemed disposition of shares; {4%} {3] explain the tax implications of deemed disposition of rental properties; (4%) {4) prepare Mr. J 's final return and Rights and Things returns {including federal and provincial taxes} {31%}. {5) Show all calculations and explain any unused information in your calculation (3%).