HELLO! I'LL BE EXTREMELY GRATEFUL IF ANYONE COMPLETES THIS QUESTION! THANKS A LOT IN ADVANCE
Earl Grey has come to you for some help in computing his income from his investments. He is trying to plan for the payment of his 2020 taxes and wants an idea as to how much that tax bill will be. He has provided you with the following details regarding his investments for 2020. GIC He has a 5%, three-year semi-annual compound-interest GIC purchased April 1, 2019 for $10,000. Interest accruing on the GIC has been as follows: April 1, 2019 to September 30, 2019.. $250 October 1, 2019 to December 31, 2019, 126 January 1, 2020 to March 31, 2020. 123 April 1, 2020 to September 30, 2020.. 250 October 1, 2020 to December 31, 2020 125 We will not receive payment of the interest until the bond expires April 1, 2022. Shares He has owned Chamomile Co. shares for a number of years. Chamomile is a public Canadian company and his employer. The shares paid total dividends of $0.06 per share in 2020. On October 1, 2020, after the dividend payments for the year, Earl sold 800 shares for $28.125 per share for total proceeds of $22,500. Brokerage fees are $200. The history of transactions in Chamomile is as follows: February 2007 He purchased 1000 shares for $8 per share under his employer's stock option plan. At the time of the exercise, the shares were valued at $10.50 per share. These shares were split 2 for 1. He purchased an additional 600 shares for $12.50 per share. June 2011 July 2011 Earl also owns shares of Tetley, a British corporation. During the year he received dividends of $1,700 (translated into Canadian dollars, net of $300 taxes withheld). Rental Properties At the beginning of 2020, Earl had two rental properties. These properties are expected to have the following operating cash flows associated with them: #1 #2 Gross rents received $20,000 $12,000 Expenses related to earning rental income: Advertising (for tenants) 200 Nil Property taxes 2,400 2,000 Utilities (landlord provided) 4,200 2,800 Property #1 was purchased in 2006 at a cost of $500,000 for both the land and building. The cost of the land was $90,000 of the total purchase price. Property #2 was purchased in 2009 at a total cost of $305,000; the fair market value of the land at the time was $105,000. The UCC balance in Class 1 for property 1 was $236,339 and property 2 was $130,307 at January 1, 2020. During 2020, the local community enacted strict new bylaws on the safety requirements of rental properties. To upgrade the two properties to the new code would require $40,000 for property #1 and $60,000 for property #2. As a result, Earl decided to improve #1 and paid $40,000 during July 2020. However, he decided to sell property #2 and did so for $448,000, effective May 5, 2020. The fair market value of the land was appraised to be $120,000 and the building $328,000. The purchaser of the property paid $100,000 on May 5, 2020, plus a mortgage that repays $10,000 monthly plus interest at 10% computed semi-annually. Thus, combined payments on June 5, 2020 through November 5, 2020, inclusive, were for $11,233 each, and from December 5, 2020 through May 5, 2021, inclusive, will be $10,733 each. Earl used the proceeds, net of the $40,000 needed for property #1, to purchase a new sixplex on Orange Pekoe Lane. The cost of the new property was $900,000, of which $150,000 related to the cost of the land. This property closed on August 1, 2020. Interest on the $700,000 mortgage is $21,800 for the last five months of the year. He was able to rent the building's units to students beginning in September with cash flows as follows: $18,000 Gross rents received. Expenses related to earning rental income: Advertising (for tenants). Property taxes... Utilities (paid by tenants). 500 3,400 Nil Required: Calculate the effect on property income for tax purposes for 2020 of the above investments. IGNORE CAPITAL GAINS AS WE HAVE NOT COVERED THAT. Mr. Grey always likes to report the minimum possible income each year. Support your treatment of each item listed above with a reason or a complete calculation. Earl Grey has come to you for some help in computing his income from his investments. He is trying to plan for the payment of his 2020 taxes and wants an idea as to how much that tax bill will be. He has provided you with the following details regarding his investments for 2020. GIC He has a 5%, three-year semi-annual compound-interest GIC purchased April 1, 2019 for $10,000. Interest accruing on the GIC has been as follows: April 1, 2019 to September 30, 2019.. $250 October 1, 2019 to December 31, 2019, 126 January 1, 2020 to March 31, 2020. 123 April 1, 2020 to September 30, 2020.. 250 October 1, 2020 to December 31, 2020 125 We will not receive payment of the interest until the bond expires April 1, 2022. Shares He has owned Chamomile Co. shares for a number of years. Chamomile is a public Canadian company and his employer. The shares paid total dividends of $0.06 per share in 2020. On October 1, 2020, after the dividend payments for the year, Earl sold 800 shares for $28.125 per share for total proceeds of $22,500. Brokerage fees are $200. The history of transactions in Chamomile is as follows: February 2007 He purchased 1000 shares for $8 per share under his employer's stock option plan. At the time of the exercise, the shares were valued at $10.50 per share. These shares were split 2 for 1. He purchased an additional 600 shares for $12.50 per share. June 2011 July 2011 Earl also owns shares of Tetley, a British corporation. During the year he received dividends of $1,700 (translated into Canadian dollars, net of $300 taxes withheld). Rental Properties At the beginning of 2020, Earl had two rental properties. These properties are expected to have the following operating cash flows associated with them: #1 #2 Gross rents received $20,000 $12,000 Expenses related to earning rental income: Advertising (for tenants) 200 Nil Property taxes 2,400 2,000 Utilities (landlord provided) 4,200 2,800 Property #1 was purchased in 2006 at a cost of $500,000 for both the land and building. The cost of the land was $90,000 of the total purchase price. Property #2 was purchased in 2009 at a total cost of $305,000; the fair market value of the land at the time was $105,000. The UCC balance in Class 1 for property 1 was $236,339 and property 2 was $130,307 at January 1, 2020. During 2020, the local community enacted strict new bylaws on the safety requirements of rental properties. To upgrade the two properties to the new code would require $40,000 for property #1 and $60,000 for property #2. As a result, Earl decided to improve #1 and paid $40,000 during July 2020. However, he decided to sell property #2 and did so for $448,000, effective May 5, 2020. The fair market value of the land was appraised to be $120,000 and the building $328,000. The purchaser of the property paid $100,000 on May 5, 2020, plus a mortgage that repays $10,000 monthly plus interest at 10% computed semi-annually. Thus, combined payments on June 5, 2020 through November 5, 2020, inclusive, were for $11,233 each, and from December 5, 2020 through May 5, 2021, inclusive, will be $10,733 each. Earl used the proceeds, net of the $40,000 needed for property #1, to purchase a new sixplex on Orange Pekoe Lane. The cost of the new property was $900,000, of which $150,000 related to the cost of the land. This property closed on August 1, 2020. Interest on the $700,000 mortgage is $21,800 for the last five months of the year. He was able to rent the building's units to students beginning in September with cash flows as follows: $18,000 Gross rents received. Expenses related to earning rental income: Advertising (for tenants). Property taxes... Utilities (paid by tenants). 500 3,400 Nil Required: Calculate the effect on property income for tax purposes for 2020 of the above investments. IGNORE CAPITAL GAINS AS WE HAVE NOT COVERED THAT. Mr. Grey always likes to report the minimum possible income each year. Support your treatment of each item listed above with a reason or a complete calculation
