BUSI 2005 - Summer 2020 Assignment 4 - Chapters 9, 10, 11 (and 4) Due Sunday, August 2, 2020 ***IMPORTANT*** Assignment Remarks Calculations and Support Marks are provided for work shown. Please show all your work (whether or not it ends up being relevant to the final answer). For example, in a tax calculation where you must choose the lesser of two amounts, my expectation is that you show the calculation of both amounts, and show the selection of the lesser of. If performing calculations in excel, please make sure to show your work (not just formulae in a cell). The marker is not responsible for going into your cell to see what formula you used. It should be evident from your calculation notes. Presentation and Professionalism Marks are awarded for good presentation, spelling, grammar, punctuation, etc., but they are not \"freebie\" marks. Assignments should be typed, unless you have extremely neat handwriting. They should be well-organized and easy to follow. Late assignments are unprofessional, will not be accepted and will receive 0. Academic Integrity While you may ask classmates technical questions about the assignment material (I'm a strong believer that peers are a great resource and you can help each other learn), the submitted work must be your own. Question 1 Bella originally paid $30,000 for common shares in Twilight Inc. (a public company), which pays an annual dividend of $2,000. Bella is considering transferring these shares to either her husband Edward, or her 3 year-old daughter, Renesmee. At the time of consideration of the transfer, the shares are worth $50,000. a) What are the income tax consequences if Bella gifts the shares to Edward i. With the automatic rollover? ii. If they opt out of the rollover? b) What are the income tax consequences if Bella sells the shares to Edward for $30,000 i. With the automatic rollover? ii. If they opt out of the rollover? c) What are the income tax consequences if Bella gifts the shares to Renesmee? Consider the following in your response: What are the Proceeds of Disposition for Bella? Will she have a capital gain/loss immediately? What is the ACB for Edward? Will double taxation occur? Will attribution of the dividend occur subsequent to the transfer? Why or why not? Will attribution of the capital gain occur (when the shares are finally sold to a third party)? Why or why not? Question 2 Carlisle and Esme are married and successfully completed an adoption in 2019 for Rosalie, a 2-year-old, spending $21,000 in 2019 on eligible adoption expenses in the process. Carlisle is a young teacher in a rural town who operates a lawn maintenance business during the summer months. He has provided you with the following information: Teaching employment Health/dental plan premiums paid by Carlisle Dividends on public co shares (cash received) Net income from lawn maintenance business Capital gain on sale of public co shares Capital loss on sale of mutual fund units Capital loss on shares of private co (qualifies as SBC) 2019 see T4 see T4 (box 85) see T3 12,000 18,000 (14,000) (15,000) 2018 82,000 900 3,000 1,000 - - Carlisle makes annual spousal and child support payments to his ex-wife in the amounts of $6,000 and $10,000 respectively. Carlisle had unused RRSP contribution room from the prior year of $10,000. He made RRSP contributions of $16,000 in April 2019 and withdrew the $30,000 total he had in his RRSP five months later to purchase his first home. Carlisle has used $6,000 of his capital gain exemption in the past to eliminate capital gains on small business investments. Carlisle also spends 250 hours of time in the year as a volunteer firefighter in his rural community. He does not receive any income for these services. Carlisle and Esme have unused federal tuition amounts being carried-forward of $4,000 and $6,000 respectively. Esme is employed at a local marketing company (see T4). She had accumulated significant vacation time over the last few years and so took 2 months off when Rosalie arrived, but returned to work after that and Rosalie entered daycare. Daycare costs amounted to $10,000 in 2019, and an additional $2,000 was spent on food/clothing/supplies for Rosalie. Esme has limited investments but did contribute $5,000 to her TFSA in 2019. She also made donations of $300. In past years, Carlisle and Esme have not had sufficient medical expenses to claim anything, but they suspect that they have incurred enough recently to finally be able to claim the medical expense credit. Details below: Carlisle Esme Carlisle Esme Rosalie Esme Carlisle Description Physiotherapy Date Evenly from December 2018 - June 2019 Prescription drugs, net of health plan coverage Eye exam, glasses Eye exam, contacts Prescription drugs, net of health plan coverage Multivitamins and iron supplements Laser eye surgery October - November 2019 December 2018 March 2019 August 2019 Evenly throughout 2019 January 2020 Amount $2,400 (50% of this was reimbursed by health plan) $400 $500 $450 $75 $250 $4,500 Required - a) Calculate Carlisle and Esme's net income for tax purposes and taxable income for 2019. Identify any loss carry-overs that exist, if any, at the end of the year. b) Assume Carlisle and Esme have Provincial Taxes Payable of $2,000 and $1,000 respectively. Calculate Carlisle and Esme's balance due/refund. c) Briefly explain why any 2019 items have been omitted from your calculations in parts (a) and (b). Question 3 Maxine used to work and live in Alberta but has accepted a new job in Ontario. The new job has a starting salary of $90,000 per year, or $7,500 per month. She moved herself, her spouse and her child there in October, so she could start her new job on November 1. While they had rented their accommodations in Alberta, they bought a new house in Ontario. She incurred the following expenses as a result of the move: canceling the lease on their rental apartment, $1,200. hiring movers to pack and move their household effects, $12,000. legal fees on the house purchase, $1,400. land transfer tax on the house purchase, $3,000. cost of disconnecting utilities in Alberta, $100. cost of connecting utilities in Ontario, $200. airfare from Alberta to Ontario, $3,300. Lunch for the three of them between connecting flights, $40 Required: How much can she claim for moving expenses in the year of the move