In 2018, after several years of working part time, Lucinda Mclvor won a lottery prize of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
In 2018, after several years of working part time, Lucinda Mclvor won a lottery prize of more than $1,000,000. She embarked on a program of actively investing in rental properties and in the shares and debt of small private companies. Her investment income during the three years 2019 through 2021 were as follows: 2019 During this year she realized a large capital gain on the sale of shares in a successful small business corporation. The shares were eligible for the capital gains deduction as QSBC shares. She used $156,000 of her capital gains deduction (actual capital gains deduction was $78,000 [(50%) ($156,000)]) to reduce her 2019 taxable income to an amount that allowed her to claim all of her available tax credits and reduce her federal tax payable to nil. 2020 During this year she had the following amounts of income: Taxable capital gains Rental income Interest income Total 2021 Income amounts during this year were as follows: Taxable capital gains Rental income Interest income Total $ 17,300 91,450 38,275 $147,025 $ 18,620 86,300 27,438 $132,358 During 2021, Recovery Inc., a small business corporation to which she had extended a loan of $675,000, began bankruptcy proceedings. Lucinda has been advised that it is extremely unlikely that she will recover any of this amount. Given this, Lucinda will file an election under ITA 50(1) to deem the debt to have been disposed of for nil proceeds. The only tax credit available to Lucinda in 2020 or 2021 is the basic personal credit (basic personal amount of $13,229 in 2020 and $13,808 in 2021). For several years prior to 2019, Lucinda's tax pay- able was eliminated by various credits. She did not have any loss carry overs from years prior to 2021. Required: Determine Lucinda's optimum taxable income for the years ending December 31, 2020, and December 31, 2021. In your solution, consider the effect of the basic personal credit. Indicate any loss carry over balance that is available at the end of either year, and the rules appli- cable to claiming the loss carry over. In 2018, after several years of working part time, Lucinda Mclvor won a lottery prize of more than $1,000,000. She embarked on a program of actively investing in rental properties and in the shares and debt of small private companies. Her investment income during the three years 2019 through 2021 were as follows: 2019 During this year she realized a large capital gain on the sale of shares in a successful small business corporation. The shares were eligible for the capital gains deduction as QSBC shares. She used $156,000 of her capital gains deduction (actual capital gains deduction was $78,000 [(50%) ($156,000)]) to reduce her 2019 taxable income to an amount that allowed her to claim all of her available tax credits and reduce her federal tax payable to nil. 2020 During this year she had the following amounts of income: Taxable capital gains Rental income Interest income Total 2021 Income amounts during this year were as follows: Taxable capital gains Rental income Interest income Total $ 17,300 91,450 38,275 $147,025 $ 18,620 86,300 27,438 $132,358 During 2021, Recovery Inc., a small business corporation to which she had extended a loan of $675,000, began bankruptcy proceedings. Lucinda has been advised that it is extremely unlikely that she will recover any of this amount. Given this, Lucinda will file an election under ITA 50(1) to deem the debt to have been disposed of for nil proceeds. The only tax credit available to Lucinda in 2020 or 2021 is the basic personal credit (basic personal amount of $13,229 in 2020 and $13,808 in 2021). For several years prior to 2019, Lucinda's tax pay- able was eliminated by various credits. She did not have any loss carry overs from years prior to 2021. Required: Determine Lucinda's optimum taxable income for the years ending December 31, 2020, and December 31, 2021. In your solution, consider the effect of the basic personal credit. Indicate any loss carry over balance that is available at the end of either year, and the rules appli- cable to claiming the loss carry over.
Expert Answer:
Answer rating: 100% (QA)
Lucindas optimum taxable income for the year ending December 31 2020 is 91450 This allows her to cla... View the full answer
Related Book For
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett
Posted Date:
Students also viewed these accounting questions
-
This case study on project evaluation is applicable for beginning courses in corporate finance or finance strategy. Two alternative investment options are available to evaluate. Challenges are...
-
The following additional information is available for the Dr. Ivan and Irene Incisor family from Chapters 1-5. Ivan's grandfather died and left a portfolio of municipal bonds. In 2012, they pay Ivan...
-
The Crazy Eddie fraud may appear smaller and gentler than the massive billion-dollar frauds exposed in recent times, such as Bernie Madoffs Ponzi scheme, frauds in the subprime mortgage market, the...
-
Find the equation for the lower half of the circle x + (y-8) = 7. Put the equation in the form y = g(x), and then enter g(x) into the answer box below. Enter your answer as a symbolic function of x,...
-
Ben Williams Company reported these ratios at December 31, 2010 (dollar amounts in millions): Ben Williams Company completed these transactions during 2011: a. Purchased equipment on account, $8 b....
-
a. Land with an assessed value of $300,000 for property tax purposes is acquired by a business for $500,000. Seven years later, the plot of land has an assessed value of $400,000 and the business...
-
StopnShop was organized in Hong Kong on January 1, 2017, with a capital stock issue that yielded HK\($100\) million. The exchange rate at that date was \($0.10/HKS.\) Transactions for 2017 and the...
-
The president of the retailer Prime Products has just approached the companys bank with a request for a $30,000, 90-day loan. The purpose of the loan is to assist the company in acquiring...
-
Current Attempt in Progress Crane Company is considering an investment that will return a lump sum of $898,000 6 years from now. Click here to view the factor table. (For calculation purposes, use 5...
-
Donna Shader, manager of the Winter Park Hotel, is considering how to restructure the front desk to reach an optimum level of staff efficiency and guest service. At present, the hotel has five clerks...
-
Download the following all to the same folder: The program Lab9-start.py Download Lab9-start.py The data files health-no-head-sample.csv Download health-no-head-sample.csvand health-no-head.csv...
-
4. Calculate the expected concentration of the sodium hydroxide solution. The molar mass of NaOH is 39.997 g/mol. 5. Calculate and record the expected mass of benzoic acid required to react with...
-
Period Sales1. 120 2. 160 3. 200 4. 210 5. 240 6. 300 Find the forecasted sales in 3rd Quarten.
-
The following information was available from the inventory records of Swifty Company for January: Units Unit Cost Total Cost Balance at January 1 8800 $9.79 $86152 Purchases: January 6 6100 10.32...
-
Katsura Corporation incurred pre-operating costs: Investigatory expenses of $18,000 New employee training $25,000 Advertising $10,000 Land and building for use as a retail store when opened $150,000...
-
Direct Labor Variances Ada Clothes Company produced 40,000 units during April. The Cutting Department used 12,800 direct labor hours at an actual rate of $16.50 per hour. The Sewing Department used...
-
Hi im trying to find research showing CBT or other psychological approaches in uk prisons are more beneficial for some inmates rather than TC's. Can you help me find a good article. Just the link to...
-
How do the principles of (a) Physical controls and (b) Documentation controls apply to cash disbursements?
-
Valerie Borg is a vice-president of Program Management with an equipment leasing company in Calgary. Recently, Valerie was approached by a large public company, Key Equipment Finance Limited ("Key"),...
-
During its year ended December 31, 2012, Power Boat Corporation Ltd. sold its retailing facilities in Kingston. As the sale occurred in December, business activity was at a low. New facilities were...
-
Dawn, a client of yours, generally has employment income from her company and some investment income. In early 2012, you arranged Dawn's affairs such that she would crystallize her $500,000 capital...
-
The following transactions relate to topics in this chapter. a. Purchased inventory on account, terms \(2 / n, n / 30\), accounted for using the perpetual method. b. Collected sales taxes on a...
-
Atlas Inc. issues short-term interest-bearing notes and uses the proceeds to purchase inventory. The company's profits for the year remain unchanged. Required Indicate how the use of the notes would...
-
List and briefly explain the primary characteristics of long-term debt securities. What are the primary distinctions between a debt security and an equity security?
Study smarter with the SolutionInn App