Calculate the after tax return for James, who has an effective tax rate of 35 , as a result of the following investments in KUP a Canadian public company, SUF a CCPC, and WEF a publicly traded American company Jan 1 Purchased 200 KUP shares for $10 per share Jan 31 Purchased 100 SUF shares for $12 per share Feb 1 Purchased 100 KUP shares for $13 per share Mar 31 The KUP shares paid a $1 00 per share dividend May 31 Sold 100 SUF shares for $8 per share Jun 15 Purchased 75 SUF shares for $6 per share Jul 30 The SUF shares paid a $0 50 per share dividend Aug 1 Purchased 400 WEF shares for $5 CAD per share Sept 1 The WEF shares paid a $0 25 CAD per share dividend Sept 30 Sold the WEF shares for $7 50 CAD per share Nov 30 When the KUP shares were trading for $15 per share gave 100 shares to his 16 year old daughter, 100 shares to his 20 year old daughter, and 100 shares to his spouse Dec 1 The KUP shares paid a $1 00 per share dividend Dec 15 Both daughters sold all the KUP shares for $16 per share Dec 31 His spouse sold all the KUP shares for $17 per share James also owned two small businesses a food truck business and a car wash The food truck business he started two years ago as a sole shareholder with an investment of $100,000 The money was used to build a food truck and fund the business startup In October he sold all the shares to one of his cooks for $120,000 The car wash business he purchased for $750,000 three years ago The business consisted of one lot with the car lot on it and a second lot that was vacant which the original owner had intended to use for a used car sales lot Both lots had a land value of $200,000 The vacant lot had cost him $10,000 a year in property taxes and interest which he was able to offset with the occasional rental to the movie industry when they needed to store their trailers He earned $20,000 in total over the three years from rental income He sold the vacant lot in September for $6000,000 The buyer paid him $150,000 down and signed a loan to pay $150,000 principal and $7,500 interest per year for three years

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Nov 18, 2020

Calculate the after-tax return for James, who has an effective tax rate of 35%, as a result of the following investments in KUP a Canadian

Calculate the after-tax return for James, who has an effective tax rate of 35%, as a result of the following investments in KUP a Canadian public company, SUF a CCPC, and WEF a publicly traded American company.

Jan. 1 Purchased 200 KUP shares for $10 per share
Jan. 31 Purchased 100 SUF shares for $12 per share
Feb. 1 Purchased 100 KUP shares for $13 per share
Mar. 31 The KUP shares paid a $1.00 per share dividend
May 31 Sold 100 SUF shares for $8 per share
Jun. 15 Purchased 75 SUF shares for $6 per share
Jul. 30 The SUF shares paid a $0.50 per share dividend
Aug. 1 Purchased 400 WEF shares for $5 CAD per share
Sept. 1 The WEF shares paid a $0.25 CAD per share dividend
Sept. 30 Sold the WEF shares for $7.50 CAD per share
Nov. 30 When the KUP shares were trading for $15 per share gave 100 shares to his 16-year-old daughter, 100 shares to his 20-year-old daughter, and 100 shares to his spouse.
Dec. 1 The KUP shares paid a $1.00 per share dividend
Dec. 15 Both daughters sold all the KUP shares for $16 per share.
Dec. 31 His spouse sold all the KUP shares for $17 per share.

James also owned two small businesses: a food truck business and a car wash.

The food truck business he started two years ago as a sole shareholder with an investment of $100,000. The money was used to build a food truck and fund the business startup. In October he sold all the shares to one of his cooks for $120,000.

The car wash business he purchased for $750,000 three years ago. The business consisted of one lot with the car lot on it and a second lot that was vacant which the original owner had intended to use for a used car sales lot. Both lots had a land value of $200,000. The vacant lot had cost him $10,000 a year in property taxes and interest which he was able to offset with the occasional rental to the movie industry when they needed to store their trailers. He earned $20,000 in total over the three years from rental income. He sold the vacant lot in September for $6000,000. The buyer paid him $150,000 down and signed a loan to pay $150,000 principal and $7,500 interest per year for three years.