question archive You were preparing your client list with respect to the personal tax return preparation season in February
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%).
