You were preparing your client list with respect to the personal tax return preparation season in February

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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. 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:

Fair market value ?Unit#1 $100,000?Land? $100,000?Building? Unit #2 $180,000?Land? $90,000?Building?

Capital cost ?Unit#1 90,000?LAnd? 72,000 ?building?Unit #2 110,000?LAnd? 93,000 ?building?

UCC Unit #1 50,000 ?building? Unit #2 64,000 ?building?

You are asked to use the above information to

(1) identify the filing requirements 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) (37%).

(5) Show all calculations and explain any unused information in your calculation (3%).