Due to the low interest rate environment, Nick borrowed $100,000 from Crown Bank (a

Chartered bank) on June 1st. Nick originally used the borrowed funds as follows:

$80,000 to invest in common shares of Green Co., a public company; and

$20,000 to invest in common shares of Blue Co., a public company.

On September 1st, Nick sold all of his Green Co. for $70,000. Nick used $30,000 to buy

shares of his brothers small business corporation, Bro Co. Nick used the remaining

$40,000 to pay for his daughters MBA tuition.

Neither Green Co. or Blue Co. paid dividends to shareholders in 2020 due to the

pandemic. The companies have always been known to pay dividends in the past. On

December 15th, Nick received a $5,000 capital dividend and $6,000 non-eligible dividend

from Bro Co. Nick paid $400 of interest for each month that the $100,000 loan was

outstanding.

Mrs. Partner has asked you to calculate and explain Nicks total interest deduction for

2020. Mrs. Partner would also like you to summarize the impact on Nicks 2020 taxable

income as a result of the sale of his Green Co. shares and dividends from Bro Co.

(3) Nick and Loretta have a rental property (a condo) in Florida. The rental property was

purchased for $300,000 in 2015. On January 1st, when the condo had a value of

$550,000, Nick gifted the property to Loretta and will not elect out of the spousal rollover.

Net rental income amounts to approximately $4,500 a month.

Mrs. Partner has asked you to analyze the current and future income tax implications

and reporting obligations with respect to the Florida property