1.Ms. Harriet Lowe owns a city home in Vernon, as well as a chalet at the Silver Star ski area.The city home was purchased in 2005 at a cost of $172,000.The chalet was purchased in 2011 for $89,000.On July 1, 2019, the house is sold for $214,000 and the chalet is sold for $122,000.She has spent some time in each property in every year from 2011 through 2019.

Required: Determine the minimum capital gain that she must report for 2019 because of the sale of the two properties. Harriet wishes to use the principal residence exemption to reduce her income taxes.

2.Several years ago, Ms. Natasha Simone acquired an existing building to be used in her unincorporated business. Total cost of the property was $1,200,000.

On January 1, 2019, the building that was used in the business was sold $1,500,000

down payment at the time of purchase, with the remaining balance payable on January 1, 2021. No payments are required in 2020 except for interest. Interest on the outstanding balance is paid on December 31 at an annual rate of 6 percent.

Natasha plans to use reserves to defer the payment of taxes on the capital gain which results from this sale.

Required:Indicate the tax effect of these transactions on Natasha's Net Income for Tax Purposes for the years 2019, 2020, and 2021, assuming:

a. that the down payment was equal to 10% of the sales price.