1 2 Question 5: Taxable Capital Gains (12 marks) Parta Tanya Goodard is the owner of two residences. She purchased the Langley home in 2004, and in 2016 after finding new employment she purchased the Halifax home. In each of the subsequent years, she spent some time at each residence. She sold both residences and moved in with her mother in 2021. The selling prices and costs of the homes are shown below. She wants to minimize the taxes she pays on the capital gains, S 3 4 Home Langley Halifax Selling price, net of real estate fees 706,100 574,700 6 Acquisition cost 575,900 469,600 7 Capital gain 130,200 105,100 8 Number of years owned No marks are awarded for this table 9 Capital gain per year 10 11 Required: 2. Explain how Tanya should choose which home should be designated as her principal residence for the taxation years owned to minimize her capital gains that arose as the result of selling the two properties. (2 marks) 12 5 D 1 2. Calculate anyu'stacable capital gain under the designation that you have recommended) G H 15 76 7 Principal residence 8 Exempt portion of capital in Capital gain 1 of years desenated 9 Number of years owned Langley Principal residence exemption Exempt portion of capital gain Enter as a whole number. DO NOT SHOW THE 130,200 Capital gain Less exempt portion of capital in Revised Capital Gain Taxable Capital Gain Halifax Principal residence exemption Exempt portion of capital gain Enter as a whole number. DO NOT SHOW THE "1" 105,100 Capital gain - Less exempt portion of capital gain: Revised Capital Gain Taxable Capital Gain Part b. This is unrelated to part a. above. Ben inherited a piece of land in the foothills of Alberta from his late grandmother. At the time of her death the land had a fair market value of $300,000. During the current year Ben is approached by a land developer who offers a $1,000,000 for the land. The land developer would pay a 25% downpayment and Ben would accept a note payable for the remaining $750,000. 1. Explain to Ben the tax consequences of selling the land (1 marks), D B C Part b. This is unrelated to part a. above. Ben inherited a piece of land in the foothills of Alberta from his late grandmother. At the time of her death the land had a fair market value of $300,000. During the current year Ben is approached by a land developer who offers a $1,000,000 for the land. The land developer would pay a 25% downpayment and Ben would accept a note payable for the remaining $750,000 d 1. Explain to Ben the tax consequences of selling the land (1 marks). 2. Ben would like to deducts the maximum capital gains reserve in the current year and subsequent years. Explain how the capital gains reserve would reduce Ben's capital gain. (2 marks). 1 2 Question 5: Taxable Capital Gains (12 marks) Parta Tanya Goodard is the owner of two residences. She purchased the Langley home in 2004, and in 2016 after finding new employment she purchased the Halifax home. In each of the subsequent years, she spent some time at each residence. She sold both residences and moved in with her mother in 2021. The selling prices and costs of the homes are shown below. She wants to minimize the taxes she pays on the capital gains, S 3 4 Home Langley Halifax Selling price, net of real estate fees 706,100 574,700 6 Acquisition cost 575,900 469,600 7 Capital gain 130,200 105,100 8 Number of years owned No marks are awarded for this table 9 Capital gain per year 10 11 Required: 2. Explain how Tanya should choose which home should be designated as her principal residence for the taxation years owned to minimize her capital gains that arose as the result of selling the two properties. (2 marks) 12 5 D 1 2. Calculate anyu'stacable capital gain under the designation that you have recommended) G H 15 76 7 Principal residence 8 Exempt portion of capital in Capital gain 1 of years desenated 9 Number of years owned Langley Principal residence exemption Exempt portion of capital gain Enter as a whole number. DO NOT SHOW THE 130,200 Capital gain Less exempt portion of capital in Revised Capital Gain Taxable Capital Gain Halifax Principal residence exemption Exempt portion of capital gain Enter as a whole number. DO NOT SHOW THE "1" 105,100 Capital gain - Less exempt portion of capital gain: Revised Capital Gain Taxable Capital Gain Part b. This is unrelated to part a. above. Ben inherited a piece of land in the foothills of Alberta from his late grandmother. At the time of her death the land had a fair market value of $300,000. During the current year Ben is approached by a land developer who offers a $1,000,000 for the land. The land developer would pay a 25% downpayment and Ben would accept a note payable for the remaining $750,000. 1. Explain to Ben the tax consequences of selling the land (1 marks), D B C Part b. This is unrelated to part a. above. Ben inherited a piece of land in the foothills of Alberta from his late grandmother. At the time of her death the land had a fair market value of $300,000. During the current year Ben is approached by a land developer who offers a $1,000,000 for the land. The land developer would pay a 25% downpayment and Ben would accept a note payable for the remaining $750,000 d 1. Explain to Ben the tax consequences of selling the land (1 marks). 2. Ben would like to deducts the maximum capital gains reserve in the current year and subsequent years. Explain how the capital gains reserve would reduce Ben's capital gain. (2 marks)