Assignment Problem Nine - 13 (Comprehensive Case Covering Chapters 1 to 9) On January 2, 2019, the car Jonathan Blount was driving was hit by a tractor trailer. His two sons, Dirk aged 15 and Cole aged 13 were also in the car. In the crash, Cole suffered a broken leg, Dirk suffered a spinal cord injury and Jonathan suffered injuries so severe that he died in the ambulance on the way to the hospital. Jonathan was the manager of a Regina family grocery store started by his grandfather. In his will, Jonathan named his wife, Maria as his executor and left his total estate to her. Maria Blount was 53 years old. In addition to Dirk and Cole, she had two daughters, Elena aged 23 and Trish aged 17. Elena was enrolled in the Athabasca University accounting program. After Jonathan's death, Maria decided to move her family to Calgary for a number of reasons. The rehabilitation services she needed for Dirk were available in a Calgary hospital, the air travel connections for her promotional activities were better from Calgary, and Maria's wealthy parents lived near Calgary. Maria listed her Regina home for sale in February. She and Jonathan jointly purchased the house for $95,000 in 2001. They spent $67,000 in renovations over the years. The house was sold for $299,900. Real estate fees totalled $16,250. Legal fees associated with the sale were $750. During March, Maria flew to Calgary, business class, at a cost of $1,800 return to locate a new residence for her and her family. During the four days that she was there, her food and lodging costs totalled $1,220. After returning home, she made an offer on a newly built property for $1.2 million. The offer was accepted on March 20. Maria, her children and her dogs left Regina on March 29 in her SUV. They spent the night in Medicine Hat and arrived in Calgary on March 30. The trip was 812 kilometers. Assume the kilometer rate is $0.58 for both Alberta and Saskatchewan. Maria's bill for the Medicine Hat hotel totalled $1,270 for four rooms (Dirk and Cole were willing to share a room), dinner and breakfast for her and her family. Unfortunately, her new Calgary home was not available until April 2 and, as a consequence, she and her children stayed in a Calgary hotel from March 31 through April 2. This time Dirk and Cole were unwilling to share a room so the total lodging bill was $1,800. The rate included a breakfast buffet so complete that everyone skipped lunch, except the dogs. Maria's parents took them all out to dinner both nights they were staying at the hotel. The cost for moving her household effects totalled $2,340.The unplanned additional cost of leaving them in storage until her Calgary home was ready totalled $150. The cost of shipping her sports car to Calgary was $575. Her legal fees associated with acquiring the Calgary home were $900. Business Information Maria was the author of a popular series of romance novels that had many devoted followers impatiently waiting for the next book. They featured glamourous and sexy vampire accoun- tants working for Bloodsuckers LLP. For 2019, the details of her business were as follows: Book Royalties ($75,000 was paid in June, the remainder was paid in December) $212,000 Assistant's Fees (Note 1) 36,000 Research Purchases (Note 2) 2,250 Promotional Travel Costs (Note 3) 14,850 Business (100 percent) cell phone charges 600 Purchase of new office furniture 8,400 Purchase of new desktop and laptop equipment 8,000 Purchase of new iPad Pro 1,800 Office Supplies 3,480 Note 1 The fees were paid to Elena. She did the accounting for Maria's business. She also proofread the manuscripts and due to her keen interest in both accounting and vampire lore, suggested corrections and revisions. Note 2 Maria had been approached to write a movie or mini-series based on her books. In Calgary, Maria purchased DVDs of TV series and movies that included vampires and accountants to see what was available already. She and Elena viewed all of her purchases and made many notes for a pilot episode for a series titled Blood- suckers LLP. Because of lack of storage space she gave them all away to be sold at the local high school's fund raising sale. Note 3 Her publisher reimbursed her 100 percent for her travel costs. She was very popular at book fairs and book readings and her public appearances always resulted in a major increase in sales of her work. At Elena's insistence, Maria's very old computer's hard disk was wiped clean and recycled along with all of her old computer peripherals. Her only UCC balance as at January 1, 2019 was $150 for Class 50. The capital cost of the Class 50 assets to be recycled totalled $2,700. As she did her writing in Regina on the kitchen table and in bed, she did not deduct workspace in the home costs prior to April 1. Due to the increasing success and scope of her work, Maria decided that she and Elena needed to have dedicated office space in Calgary Maria's office occupied 22 percent of the total area of her Calgary home. Her 2019 home expenditures for April 2 to December 31 were as follows: Mortgage interest $24,000 Utilities 5,600 Property taxes 11,500 House insurance 1,600 House repair costs 2,800 House cleaning 3,100 Home telephone land line 750 Home internet service (40 percent business use) 960 As she does not wish to have to report any capital gain or recapture upon its eventual disposi- tion, Maria will not claim CCA on the portion of her home that is used for her office. Other Information 1. In February, 2019, Maria was surprised to receive a $15,000 cheque from the grocery store where Jonathan had worked. She learned it was a death benefit. 2. In March, 2019, she received a $50,000 cheque from her sister, Teresa. She had raised it through a GoFundMe online campaign to help pay for Dirk's medical costs. Jonathan was a volunteer hockey coach who was well loved by the many children he had coached over the years and their parents. The donations came in from all over Canada. 3. Maria's mother, Betty Lou was diagnosed with terminal cancer. She and Maria's father had run a very successful real estate firm for over 25 years. On July 1, 2019, Betty Lou gifted 1,000 preferred shares to each of her grandchildren. The 4,000 shares had a total fair market value of $1,000,000. The shares paid quarterly eligible dividends of $4 per share in September and December. At the end of 2019 Betty Lou was under hospice care. 4. Child care costs were necessary for Cole when Maria was away promoting her books. They totalled $3,900 for 2019. In the summer, Cole spent four weeks in July at a hockey camp in Canmore. The fees at this camp were $1,000 per week. Trish spent the same four weeks at a music camp in July in Banff. The fees at this camp were 5800 per week. Maria spent the four weeks on the road, promoting her work. 5. Maria's stock trading portfolio had a 21 percent growth for 2019. Before Jonathan's death they had separate discount broker accounts. They had different tolerances for risk with Jonathan invested in a low risk portfolio and Maria invested in a high risk one. At the time of his death, Jonathan's stocks had a total adjusted cost base of $378,000 and a fair market value of $401,000. They were transferred to Maria's account in compliance with his will On the transfer date, they had a fair market value of $408,000. 6. In September, she sold every stock from Jonathan's estate for a total of $392,000. In addi- tion, she sold shares in a cannabis company for $26,600 that she had purchased at a cost of $11,000. Prior to September, the inherited stocks paid eligible dividends of $12,600. 7. During 2019, Maria made a $6,000 contribution to her Tax Free Savings Account (TFSA) and a $6,000 contribution to Elena's TFSA. She also made a $6,000 contribution ($2,000 per minor child) to the family Registered Education Savings Plan. 8. After the accident, the doctors who operated on Dirk said he would likely never walk or regain the use of his arms. He took this as a challenge and vowed that he would play hockey again. He wanted continual physiotherapy to help him achieve this goal. Maria used $46,000 of the money received through the GoFundMe campaign to pay for physio- therapists. By the end of December, Dirk was encouraged that he had regained some feeling in his hands, but he could not move them by himself. A doctor attending him gave Maria a T2201, Disability Tax Credit Certificate. 9. Maria used the remaining $4,000 of the GoFundMe money to pay for grief counselling by psychiatrists for herself, Trish, Dirk and Cole. Elena paid for her own medical expenses. The family's medical expenses paid for by Maria for 2019 were as follows: Maria $ 2,600 Trish 2,800 Dirk (Including $9,300 Attendant Care Costs) 56,700 Cole 4,100 Total Medical Expenses $66,200 Required: A. Determine Maria's federal Tax Payable and her CPP liability for 2019. Ignore GST, PST and HST considerations Assignment Problem Nine - 13 (Comprehensive Case Covering Chapters 1 to 9) On January 2, 2019, the car Jonathan Blount was driving was hit by a tractor trailer. His two sons, Dirk aged 15 and Cole aged 13 were also in the car. In the crash, Cole suffered a broken leg, Dirk suffered a spinal cord injury and Jonathan suffered injuries so severe that he died in the ambulance on the way to the hospital. Jonathan was the manager of a Regina family grocery store started by his grandfather. In his will, Jonathan named his wife, Maria as his executor and left his total estate to her. Maria Blount was 53 years old. In addition to Dirk and Cole, she had two daughters, Elena aged 23 and Trish aged 17. Elena was enrolled in the Athabasca University accounting program. After Jonathan's death, Maria decided to move her family to Calgary for a number of reasons. The rehabilitation services she needed for Dirk were available in a Calgary hospital, the air travel connections for her promotional activities were better from Calgary, and Maria's wealthy parents lived near Calgary. Maria listed her Regina home for sale in February. She and Jonathan jointly purchased the house for $95,000 in 2001. They spent $67,000 in renovations over the years. The house was sold for $299,900. Real estate fees totalled $16,250. Legal fees associated with the sale were $750. During March, Maria flew to Calgary, business class, at a cost of $1,800 return to locate a new residence for her and her family. During the four days that she was there, her food and lodging costs totalled $1,220. After returning home, she made an offer on a newly built property for $1.2 million. The offer was accepted on March 20. Maria, her children and her dogs left Regina on March 29 in her SUV. They spent the night in Medicine Hat and arrived in Calgary on March 30. The trip was 812 kilometers. Assume the kilometer rate is $0.58 for both Alberta and Saskatchewan. Maria's bill for the Medicine Hat hotel totalled $1,270 for four rooms (Dirk and Cole were willing to share a room), dinner and breakfast for her and her family. Unfortunately, her new Calgary home was not available until April 2 and, as a consequence, she and her children stayed in a Calgary hotel from March 31 through April 2. This time Dirk and Cole were unwilling to share a room so the total lodging bill was $1,800. The rate included a breakfast buffet so complete that everyone skipped lunch, except the dogs. Maria's parents took them all out to dinner both nights they were staying at the hotel. The cost for moving her household effects totalled $2,340.The unplanned additional cost of leaving them in storage until her Calgary home was ready totalled $150. The cost of shipping her sports car to Calgary was $575. Her legal fees associated with acquiring the Calgary home were $900. Business Information Maria was the author of a popular series of romance novels that had many devoted followers impatiently waiting for the next book. They featured glamourous and sexy vampire accoun- tants working for Bloodsuckers LLP. For 2019, the details of her business were as follows: Book Royalties ($75,000 was paid in June, the remainder was paid in December) $212,000 Assistant's Fees (Note 1) 36,000 Research Purchases (Note 2) 2,250 Promotional Travel Costs (Note 3) 14,850 Business (100 percent) cell phone charges 600 Purchase of new office furniture 8,400 Purchase of new desktop and laptop equipment 8,000 Purchase of new iPad Pro 1,800 Office Supplies 3,480 Note 1 The fees were paid to Elena. She did the accounting for Maria's business. She also proofread the manuscripts and due to her keen interest in both accounting and vampire lore, suggested corrections and revisions. Note 2 Maria had been approached to write a movie or mini-series based on her books. In Calgary, Maria purchased DVDs of TV series and movies that included vampires and accountants to see what was available already. She and Elena viewed all of her purchases and made many notes for a pilot episode for a series titled Blood- suckers LLP. Because of lack of storage space she gave them all away to be sold at the local high school's fund raising sale. Note 3 Her publisher reimbursed her 100 percent for her travel costs. She was very popular at book fairs and book readings and her public appearances always resulted in a major increase in sales of her work. At Elena's insistence, Maria's very old computer's hard disk was wiped clean and recycled along with all of her old computer peripherals. Her only UCC balance as at January 1, 2019 was $150 for Class 50. The capital cost of the Class 50 assets to be recycled totalled $2,700. As she did her writing in Regina on the kitchen table and in bed, she did not deduct workspace in the home costs prior to April 1. Due to the increasing success and scope of her work, Maria decided that she and Elena needed to have dedicated office space in Calgary Maria's office occupied 22 percent of the total area of her Calgary home. Her 2019 home expenditures for April 2 to December 31 were as follows: Mortgage interest $24,000 Utilities 5,600 Property taxes 11,500 House insurance 1,600 House repair costs 2,800 House cleaning 3,100 Home telephone land line 750 Home internet service (40 percent business use) 960 As she does not wish to have to report any capital gain or recapture upon its eventual disposi- tion, Maria will not claim CCA on the portion of her home that is used for her office. Other Information 1. In February, 2019, Maria was surprised to receive a $15,000 cheque from the grocery store where Jonathan had worked. She learned it was a death benefit. 2. In March, 2019, she received a $50,000 cheque from her sister, Teresa. She had raised it through a GoFundMe online campaign to help pay for Dirk's medical costs. Jonathan was a volunteer hockey coach who was well loved by the many children he had coached over the years and their parents. The donations came in from all over Canada. 3. Maria's mother, Betty Lou was diagnosed with terminal cancer. She and Maria's father had run a very successful real estate firm for over 25 years. On July 1, 2019, Betty Lou gifted 1,000 preferred shares to each of her grandchildren. The 4,000 shares had a total fair market value of $1,000,000. The shares paid quarterly eligible dividends of $4 per share in September and December. At the end of 2019 Betty Lou was under hospice care. 4. Child care costs were necessary for Cole when Maria was away promoting her books. They totalled $3,900 for 2019. In the summer, Cole spent four weeks in July at a hockey camp in Canmore. The fees at this camp were $1,000 per week. Trish spent the same four weeks at a music camp in July in Banff. The fees at this camp were 5800 per week. Maria spent the four weeks on the road, promoting her work. 5. Maria's stock trading portfolio had a 21 percent growth for 2019. Before Jonathan's death they had separate discount broker accounts. They had different tolerances for risk with Jonathan invested in a low risk portfolio and Maria invested in a high risk one. At the time of his death, Jonathan's stocks had a total adjusted cost base of $378,000 and a fair market value of $401,000. They were transferred to Maria's account in compliance with his will On the transfer date, they had a fair market value of $408,000. 6. In September, she sold every stock from Jonathan's estate for a total of $392,000. In addi- tion, she sold shares in a cannabis company for $26,600 that she had purchased at a cost of $11,000. Prior to September, the inherited stocks paid eligible dividends of $12,600. 7. During 2019, Maria made a $6,000 contribution to her Tax Free Savings Account (TFSA) and a $6,000 contribution to Elena's TFSA. She also made a $6,000 contribution ($2,000 per minor child) to the family Registered Education Savings Plan. 8. After the accident, the doctors who operated on Dirk said he would likely never walk or regain the use of his arms. He took this as a challenge and vowed that he would play hockey again. He wanted continual physiotherapy to help him achieve this goal. Maria used $46,000 of the money received through the GoFundMe campaign to pay for physio- therapists. By the end of December, Dirk was encouraged that he had regained some feeling in his hands, but he could not move them by himself. A doctor attending him gave Maria a T2201, Disability Tax Credit Certificate. 9. Maria used the remaining $4,000 of the GoFundMe money to pay for grief counselling by psychiatrists for herself, Trish, Dirk and Cole. Elena paid for her own medical expenses. The family's medical expenses paid for by Maria for 2019 were as follows: Maria $ 2,600 Trish 2,800 Dirk (Including $9,300 Attendant Care Costs) 56,700 Cole 4,100 Total Medical Expenses $66,200 Required: A. Determine Maria's federal Tax Payable and her CPP liability for 2019. Ignore GST, PST and HST considerations