Chapter 7 ? In-class problem

John Ingles has provided you with the following information related to his various investment

holdings as of December 31, 2016.

Interest earned on joint bank account with his spouse (spouse contributes equally) $ 2,000

Interest earned on his investment account (not joint) with his investment broker 800

Interest earned on 2015 personal income tax assessment . . . . . . . . . . . . . . . . 450

Interest on short-term investments:

$20,000 term deposit taken out November 30, 2016 (interest at maturity in six months)

Accrued interest from December 1 to December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . 85

$200,000 GIC purchased November 1, 2015 (interest payable at maturity on October 31, 2018)

Accrued interest from November 1, 2015 to October 31, 2016 . . . . . . . . . 16,000

Accrued interest from January 1, 2016 to December 31, 2016 . . . . . . . . . 16,214

Government of Canada Treasury Bills purchased for $9,009 on December 31, 2015 and amount

received on maturity on December 31, 2016 . . . . . . . . . . . . . . . . 10,000

Cash dividends received from investment in common shares of Canadian resident public corporations 24,000

Cash dividends received from common shares in US corporations (net of $3,000of foreign Taxes; $CDN) . . . 17,000

Rental details from operation of two separate rental properties (both under class 1):

Property 1 Property 2

Gross rental revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000 $ 46,000

Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 8,000

Property taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400 3,500

Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 4,800

Mortgage interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 32,000

Opening UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $368,209 $520,225

Interest expenses paid during 2016:

Interest on bank line of credit used for investing in shares described above $50,000

Interest on loan to acquire an automobile for his daughter for her 18^th birthday . . . . . . . . . . . . . . . . 3,200

Interest on a parcel of vacant land (purchased in 2009, the land does not generate any income) . . 10,000

?REQUIRED

Prepare a calculation of John?s property income for Taxation Year 2016. Comment on the income tax implications of items not included in your calculations.

Chapter 7 - In-class problem John Ingles has provided you with the following information related to his various investment holdings as of December 31, 2016. Interest earned on joint bank account with his spouse (spouse contributes equally) $ 2,000 Interest earned on his investment account (not joint) with his investment broker 800 Interest earned on 2015 personal income tax assessment . . . . . . . . . . . . . . . . 450 Interest on short-term investments: $20,000 term deposit taken out November 30, 2016 (interest at maturity in six months) Accrued interest from December 1 to December 31, 2016 . . . . . . . . . . . . . . . . . . . . . . . . . . 85 $200,000 GIC purchased November 1, 2015 (interest payable at maturity on October 31, 2018) Accrued interest from November 1, 2015 to October 31, 2016 . . . . . . . . . 16,000 Accrued interest from January 1, 2016 to December 31, 2016 . . . . . . . . . 16,214 Government of Canada Treasury Bills purchased for $9,009 on December 31, 2015 and amount received on maturity on December 31, 2016 . . . . . . . . . . . . . . . . 10,000 Cash dividends received from investment in common shares of Canadian resident public corporations 24,000 Cash dividends received from common shares in US corporations (net of $3,000of foreign Taxes; $CDN) . . . 17,000 Rental details from operation of two separate rental properties (both under class 1): Property 1 Property 2 Gross rental revenue . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 30,000 $ 46,000 Utilities . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5,000 8,000 Property taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,400 3,500 Repairs . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1,500 4,800 Mortgage interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20,000 32,000 Opening UCC . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $368,209 $520,225 Interest expenses paid during 2016: Interest on bank line of credit used for investing in shares described above $50,000 th Interest on loan to acquire an automobile for his daughter for her 18 birthday . . . . . . . . . . . . . . . . 3,200 Interest on a parcel of vacant land (purchased in 2009, the land does not generate any income) . . 10,000 REQUIRED Prepare a calculation of John's property income for Taxation Year 2016. Comment on the income tax implications of items not included in your calculations