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CANADIAN TAXABLE INCOME AND TAX PAYABLE FOR INDIVI...

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CANADIAN TAXABLE INCOME AND TAX PAYABLE FOR INDIVIDUALS Death of a Taxpayer On June 3, 2009, Andrea Steele unexpectedly died of complications associated with minor surgery. Her husband, a man with little experience in financial matters has asked you to assist him with the administration of Mrs. Steele???s estate. After working with her records for several days, you have accumulated the following information: Mrs. Steele has a net capital loss carry forward from 2007 of $76,500. During 2009, but prior to the date of her death, Mrs. Steele???s investments paid eligible dividends of $1,090. In addition, she had Canadian source interest income of $2,025 during this period. Mrs. Steele was the proprietor of a successful boutique that had been in operation for eight years. The fiscal year of this unincorporated business ends on December 31. From January 1, 2009, until the date of Mrs. Steele???s death, this business had net business income for tax purposes of $55,200. The fair market value of the assets of the boutique at the time of Mrs. Steele???s death was $4,800 greater than their UCC. None of the individual assets had a fair market value that exceed its capital cost. In connection with the boutique, Mrs. Steele paid Mr. Steele wages of $425 during the period January 1, 2009 through June 3, 2009. This money was paid for assistance in handling the inventories of the operation. Mr. Steele???s only other income for the year was $2,100 in interest on a group of mortgages, which had been given to him as a gift by Mrs. Steele three years ago. Mrs. Steele had a rental property that she had owned for a number of years. Rents received in 2009, prior to her death, amounted to $41,200, while cash expenses totalled $24,650. The UCC of the building was $144,800 on January 1, 2009. The building had been purchased for $183,000. At the time of her death, an appraisal indicated that the fair market value of the building was $235,000. The land on which the building is situated has a cost of $92,000, and a fair market value at the time of her death that is estimated to be $164,000. Other assets that were owned by Mrs. Steele at the time of her death are as follows: Shares in AGF industries: AGF Industries is a Canadian public company and Mrs. Steele purchased common shares at a cost of $10,600. Their value at the time of Mrs. Steele???s death was $7,900. Shares in Rolston Inc: Rolston Inc is also a Canadian public company and Mrs. Steele purchased shares at a cost of $36,800. Their value at the time of Mrs. Steele???s death was $169,400. Painting: A painting Mrs. Steele had purchased for $8,000 had a fair market value of $37,000 at the time of her death. Residence: Mrs. Steele owned the family home. It had been purchased at a cost of $209,400. At the time of her death, the appraised value of the property was $344,000. The terms of Mrs. Steele???s will provide that the shares in AGF Industries and Rolston Inc., the painting, and the assets of the boutique be left to Mr. Steele. The family home and the rental property are to be left to Mrs. Steele???s 27 year old daughter. REQUIRED: Calculate Mrs. Steele???s minimum 2009 federal tax payable,CANADIAN TAXABLE INCOME AND TAX PAYABLE FOR INDIVIDUALS Death of a Taxpayer On June 3, 2009, Andrea Steele unexpectedly died of complications associated with minor surgery. Her husband, a man with little experience in financial matters has asked you to assist him with the administration of Mrs. Steele???s estate. After working with her records for several days, you have accumulated the following information: Mrs. Steele has a net capital loss carry forward from 2007 of $76,500. During 2009, but prior to the date of her death, Mrs. Steele???s investments paid eligible dividends of $1,090. In addition, she had Canadian source interest income of $2,025 during this period. Mrs. Steele was the proprietor of a successful boutique that had been in operation for eight years. The fiscal year of this unincorporated business ends on December 31. From January 1, 2009, until the date of Mrs. Steele???s death, this business had net business income for tax purposes of $55,200. The fair market value of the assets of the boutique at the time of Mrs. Steele???s death was $4,800 greater than their UCC. None of the individual assets had a fair market value that exceed its capital cost. In connection with the boutique, Mrs. Steele paid Mr. Steele wages of $425 during the period January 1, 2009 through June 3, 2009. This money was paid for assistance in handling the inventories of the operation. Mr. Steele???s only other income for the year was $2,100 in interest on a group of mortgages, which had been given to him as a gift by Mrs. Steele three years ago. Mrs. Steele had a rental property that she had owned for a number of years. Rents received in 2009, prior to her death, amounted to $41,200, while cash expenses totalled $24,650. The UCC of the building was $144,800 on January 1, 2009. The building had been purchased for $183,000. At the time of her death, an appraisal indicated that the fair market value of the building was $235,000. The land on which the building is situated has a cost of $92,000, and a fair market value at the time of her death that is estimated to be $164,000. Other assets that were owned by Mrs. Steele at the time of her death are as follows: Shares in AGF industries: AGF Industries is a Canadian public company and Mrs. Steele purchased common shares at a cost of $10,600. Their value at the time of Mrs. Steele???s death was $7,900. Shares in Rolston Inc: Rolston Inc is also a Canadian public company and Mrs. Steele purchased shares at a cost of $36,800. Their value at the time of Mrs. Steele???s death was $169,400. Painting: A painting Mrs. Steele had purchased for $8,000 had a fair market value of $37,000 at the time of her death. Residence: Mrs. Steele owned the family home. It had been purchased at a cost of $209,400. At the time of her death, the appraised value of the property was $344,000. The terms of Mrs. Steele???s will provide that the shares in AGF Industries and Rolston Inc., the painting, and the assets of the boutique be left to Mr. Steele. The family home and the rental property are to be left to Mrs. Steele???s 27 year old daughter. REQUIRED: Calculate Mrs. Steele???s minimum 2009 federal tax payable,where is the answer?

 

Paper#3604 | Written in 18-Jul-2015

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