Assignment Problem Nine - 12 Comprehensive Case Covering Chapters 1 to 9) Other Income, Other Deductions, And Other Issues Assignment Problems 445 Family Information Spencer James is at veres old members of the face to Surango da mes for over 20 years. The couple have three children. All members of the family are in good health. Information on the children is as follows: Charles And Charlene are 8 year old twins. During 2020, each of the twins received aligible dividends of $1,000 on public company shares that were gifted to them by their father in July 2019. At the time of the gift, each block of shares had a fair market value of $9.500. Spencer had acquired the two blocks of shares at a cost of $8,000 each. In December 2020, each twin sold the shares for $10,000 Charlton is 19 years old and attended university on a full time basis for four months of the year. Spencer and Suzanne pay his tuition fees of $6,300, along with textbook costs of $650. He has agreed to transfer the maximum amount of his tuition credit to his father. Charlton lives with Spencer and Suzanne. His only income for the year is from the sale of shares purchased from Spencer as described in the following text. In June 2020, Spencer sells shares with an adjusted cost base of $28,000 and a fair market value of $36,500 to his son, Charlton. In order to provide Charlton with money to buy a car and to create a capital loss for himself, he sells the shares to Charlton for $5,000. Charlton sells the shares in September for $42.000 Because of their work demands, Spencer and Suzanne have child care costs for the two twins of $250 per week for 48 weeks. During the remaining four weeks, the twins are sent to summer camp at a cost of $250 per child per week. Suzanne's Income Information Suzanne operates a mail order business out of rented space. As it is furnished business space. the business does not own any capital assets. For 2020, her net business income, calculated on the basis of tax rules, was $70,544. During 2020, Suzanne spent six consecutive weeks attending a specialized business accounting program at a designated educational institution. She received a tuition tax receipt that stated she had paid $2,000 in tuition fees. In January 2019, Spencer gifted Suzanne a residential rental property. This property had cost Spencer $500,000 several years ago, with $100,000 of this amount allocated to the land and $400,000 allocated to the building. At the time of the gift, an appraisal indicates that the fair market value of the property was $530,000, allocated $110,000 to the land and $420,000 to the building. The building had a January 1, 2019, UCC of $376,320. Spencer did not recognize this transaction in his 2019 tax return For the year ending December 31, 2019, Suzanne had not rental income, after the deduction of maximum CCA of $16,400 In November 2020, after experiencing significant difficulties with tenants, Suzanne lists the property for sale. It sells within a month for $555,000, with $120,000 of this total allocated to the land and $435,000 allocated to the building. The net rental income, prior to the deduction of CCA, was $15,300 for 2020 48 Chapter Assignment Problem Spencer is employed by a Canadian public company. His annual salary is $106.700, od which is commissions. His employer withheld the following amounts from this forum Because of his excelent performance during 2020. Spencer was awarded a bonus of $20.000 Spencer is provided with an automobile by his employer. The vehicle is leased by the employer ata rate of $523 per month, including a payment of $51 per month for insurance. The autem is available to Spencer for 11 months during 2020. During the remaining month, the erroyo required that it be returned to the garage. Total mileage for 2020 is 58,000 kilometres, only On their birthday. Spencer's employer provides every employee with a $1.000 gift certificate 2 in January 2020, Spencer's father dies. He was an unsuccessful pig farmer who agonized over the death of each pig. The major asset in his father's estate is a family farm operation El Premiums CPP Contnbutions Professional Association Dues Registered Pension Plan Contributions Spencer's employer made a matching RPP contribution of $4,200 5,000 of which are for personal use. $ 856 2.898 1.200 4.200 whic ther Lang deat Buil. the of this total $10.000 will be paid in 2020, with the balance being paid in June 2021 Equ of di The orde are 3. As e inhe pure $37 4. In On aby 5. Dus $5. Reg that can be used for merchandise on Amazon, or addition of Christoas, each employees recente food and The of this basket During 2020. Spencer spent 55,600 on meals and entertainment of his employer's customers The employer's policy is to reimburse 80 percent of those costs For the last 10 years. Spencer has worked in a rural office of his employer. The rural office is located 110 kilometres from the company's head office in a major Canadian city. As his family has city office. The move involves selling his rural home and acquiring a city home. The various cash outflows associated with the move are as follows: Real Estate Commissions - Old Home $11,620 Legal Fees - Old Home 1.250 Loss - Old Home 18,000 Unpaid Property Taxes - Old Home 625 Cleaning And Minor Repairs - Old Home 450 Legal Fees - New Home 1,460 Cost Of Moving Household Goods 3,460 Requis DO Assig (Comp On Jar sons, leg. D While Spencer's employer does not provide a moving allowance, the company agrees to com pensate him for his $18.000 loss on his old home as management expects him to spend the time he spent commuting at the office Other Information 1 The family's medical expenses for 2020 were as follows: Spencer $ 4,600 Suzanne Charles Charlene Total Medical Expenses $21,500 the an Jonath will, JC Maria and Tre 8,600 4,700 3,600 *This medical expense was for a brow lift to remove wrinkles and Improve the appearance of Suzanne's forehead During reside death, the fair market value was $375,000. 447 Deductions, And Other Issues Assignment Problems which is left to Spencer (other assets go to Spencer's mother and siblings). Information on the farm's assets is as follows: Land The farm land had an adjusted cost base of $250,000. At the time of the father's Building The building had a capital cost of $325,000, a fair market value at the time of the father's death of $275,000, and UCC of $253,000 Equipment The equipment had a capital cost $130,000, a fair market value at the time of death of $110,000, and UCC of $95,000. The executors of the father's estate elect to transfer the land at its fair market value in order to use up accumulated capital losses on other assets. The building and equipment are transferred at the UCC values. 3. As Spencer, and especially his family, have no interest in running a pig farm, he sells the inherited property to his brother in March, as soon as he has title. His brother agrees to purchase the assets for the fair market values determined by the executors, specifically $375,000 for the land, $275,000 for the building, and $110,000 for the equipment. 4. In memory of his father, Spencer donates $8,400 on his father's birthday in 2020 to Hearts On Noses - A Mini Pig Sanctuary. This registered charity helps preserve the lives of injured, abused, abandoned, and neglected pot bellied pigs, 5. During 2020, Spencer makes a $4,000 contribution to his Tax Free Savings Account and $5,000 to Suzanne's. He also makes a $2,000 contribution ($1,000 per child) to the family Registered Education Savings Plan established for Charles and Charlene. Required: A. Determine Suzanne's federal Tax Payable and her CPP liability for 2020. In calculating Suzanne's federal Tax Payable, assume that Spencer's Taxable income exceeds $200,000. B. Determine Spencer's federal Tax Payable for 2020. In determining these amounts, ignore GST, PST, and HST considerations. Assignment Problem Nine - 12 Comprehensive Case Covering Chapters 1 to 9) Other Income, Other Deductions, And Other Issues Assignment Problems 445 Family Information Spencer James is at veres old members of the face to Surango da mes for over 20 years. The couple have three children. All members of the family are in good health. Information on the children is as follows: Charles And Charlene are 8 year old twins. During 2020, each of the twins received aligible dividends of $1,000 on public company shares that were gifted to them by their father in July 2019. At the time of the gift, each block of shares had a fair market value of $9.500. Spencer had acquired the two blocks of shares at a cost of $8,000 each. In December 2020, each twin sold the shares for $10,000 Charlton is 19 years old and attended university on a full time basis for four months of the year. Spencer and Suzanne pay his tuition fees of $6,300, along with textbook costs of $650. He has agreed to transfer the maximum amount of his tuition credit to his father. Charlton lives with Spencer and Suzanne. His only income for the year is from the sale of shares purchased from Spencer as described in the following text. In June 2020, Spencer sells shares with an adjusted cost base of $28,000 and a fair market value of $36,500 to his son, Charlton. In order to provide Charlton with money to buy a car and to create a capital loss for himself, he sells the shares to Charlton for $5,000. Charlton sells the shares in September for $42.000 Because of their work demands, Spencer and Suzanne have child care costs for the two twins of $250 per week for 48 weeks. During the remaining four weeks, the twins are sent to summer camp at a cost of $250 per child per week. Suzanne's Income Information Suzanne operates a mail order business out of rented space. As it is furnished business space. the business does not own any capital assets. For 2020, her net business income, calculated on the basis of tax rules, was $70,544. During 2020, Suzanne spent six consecutive weeks attending a specialized business accounting program at a designated educational institution. She received a tuition tax receipt that stated she had paid $2,000 in tuition fees. In January 2019, Spencer gifted Suzanne a residential rental property. This property had cost Spencer $500,000 several years ago, with $100,000 of this amount allocated to the land and $400,000 allocated to the building. At the time of the gift, an appraisal indicates that the fair market value of the property was $530,000, allocated $110,000 to the land and $420,000 to the building. The building had a January 1, 2019, UCC of $376,320. Spencer did not recognize this transaction in his 2019 tax return For the year ending December 31, 2019, Suzanne had not rental income, after the deduction of maximum CCA of $16,400 In November 2020, after experiencing significant difficulties with tenants, Suzanne lists the property for sale. It sells within a month for $555,000, with $120,000 of this total allocated to the land and $435,000 allocated to the building. The net rental income, prior to the deduction of CCA, was $15,300 for 2020 48 Chapter Assignment Problem Spencer is employed by a Canadian public company. His annual salary is $106.700, od which is commissions. His employer withheld the following amounts from this forum Because of his excelent performance during 2020. Spencer was awarded a bonus of $20.000 Spencer is provided with an automobile by his employer. The vehicle is leased by the employer ata rate of $523 per month, including a payment of $51 per month for insurance. The autem is available to Spencer for 11 months during 2020. During the remaining month, the erroyo required that it be returned to the garage. Total mileage for 2020 is 58,000 kilometres, only On their birthday. Spencer's employer provides every employee with a $1.000 gift certificate 2 in January 2020, Spencer's father dies. He was an unsuccessful pig farmer who agonized over the death of each pig. The major asset in his father's estate is a family farm operation El Premiums CPP Contnbutions Professional Association Dues Registered Pension Plan Contributions Spencer's employer made a matching RPP contribution of $4,200 5,000 of which are for personal use. $ 856 2.898 1.200 4.200 whic ther Lang deat Buil. the of this total $10.000 will be paid in 2020, with the balance being paid in June 2021 Equ of di The orde are 3. As e inhe pure $37 4. In On aby 5. Dus $5. Reg that can be used for merchandise on Amazon, or addition of Christoas, each employees recente food and The of this basket During 2020. Spencer spent 55,600 on meals and entertainment of his employer's customers The employer's policy is to reimburse 80 percent of those costs For the last 10 years. Spencer has worked in a rural office of his employer. The rural office is located 110 kilometres from the company's head office in a major Canadian city. As his family has city office. The move involves selling his rural home and acquiring a city home. The various cash outflows associated with the move are as follows: Real Estate Commissions - Old Home $11,620 Legal Fees - Old Home 1.250 Loss - Old Home 18,000 Unpaid Property Taxes - Old Home 625 Cleaning And Minor Repairs - Old Home 450 Legal Fees - New Home 1,460 Cost Of Moving Household Goods 3,460 Requis DO Assig (Comp On Jar sons, leg. D While Spencer's employer does not provide a moving allowance, the company agrees to com pensate him for his $18.000 loss on his old home as management expects him to spend the time he spent commuting at the office Other Information 1 The family's medical expenses for 2020 were as follows: Spencer $ 4,600 Suzanne Charles Charlene Total Medical Expenses $21,500 the an Jonath will, JC Maria and Tre 8,600 4,700 3,600 *This medical expense was for a brow lift to remove wrinkles and Improve the appearance of Suzanne's forehead During reside death, the fair market value was $375,000. 447 Deductions, And Other Issues Assignment Problems which is left to Spencer (other assets go to Spencer's mother and siblings). Information on the farm's assets is as follows: Land The farm land had an adjusted cost base of $250,000. At the time of the father's Building The building had a capital cost of $325,000, a fair market value at the time of the father's death of $275,000, and UCC of $253,000 Equipment The equipment had a capital cost $130,000, a fair market value at the time of death of $110,000, and UCC of $95,000. The executors of the father's estate elect to transfer the land at its fair market value in order to use up accumulated capital losses on other assets. The building and equipment are transferred at the UCC values. 3. As Spencer, and especially his family, have no interest in running a pig farm, he sells the inherited property to his brother in March, as soon as he has title. His brother agrees to purchase the assets for the fair market values determined by the executors, specifically $375,000 for the land, $275,000 for the building, and $110,000 for the equipment. 4. In memory of his father, Spencer donates $8,400 on his father's birthday in 2020 to Hearts On Noses - A Mini Pig Sanctuary. This registered charity helps preserve the lives of injured, abused, abandoned, and neglected pot bellied pigs, 5. During 2020, Spencer makes a $4,000 contribution to his Tax Free Savings Account and $5,000 to Suzanne's. He also makes a $2,000 contribution ($1,000 per child) to the family Registered Education Savings Plan established for Charles and Charlene. Required: A. Determine Suzanne's federal Tax Payable and her CPP liability for 2020. In calculating Suzanne's federal Tax Payable, assume that Spencer's Taxable income exceeds $200,000. B. Determine Spencer's federal Tax Payable for 2020. In determining these amounts, ignore GST, PST, and HST considerations