i . - List of assets Asset Description Proceeds of Disposition Original Price Paid Sailboat $91,000.00 $83,000.00 Speedboat $50,500.00 $71,000.00 Home $395,000.00 $235,000.00 Additional information: The home was the principal residence for Dr. Jones and his former spouse for 10 years, ending in the current taxation year. Last year, Dr. Jones sold his cabin at the lake, which he claimed as his principal residence for two taxation years the cabin at the lake was designated as Dr. Jones's principal residence for the two most recent taxation years.) Therefore, this home cannot be claimed as Dr. Jones's principal residence for those years. Vacant land $46,000.00 $330,000.00 Additional information: Dr. Jones bought this vacant land as an investment property. Since its purchase, the land has been vacant and Dr. Jones has not earned any income on the land, but he paid $1,900 in property taxes and $510 on mortgage interest on the land during this time. $680 per share 510 Big Pharma shares $490 per share Additional information: On the sale of the shares, Dr. Jones paid a brokerage commission of $3,400. 1,100 Dr. James Jones Professional Corporation $3,050 per share $85 per share Additional information: Dr. Jones had to liquidate some shares of his privately owned professional corporation (which operates his dental practice) to pay for a settlement to his former spouse. Dr. Jones paid legal fees related to this sale of shares of $16,580. Please note that these shares do not meet the definition of Qualified Small Business Corporation Shares (QSBC). Gold ring $4,000 $0 Additional information: Dr. Jones inherited this ring from his mother's estate. At the time of his mother's death, the ring had a fair market value of $280. Westjet shares $48 per share (December) Various Additional information: Dr. Jones purchased the Westjet shares over a period of time. Several years ago, he purchased 1,100 shares for $21 per share. In January of the previous taxation year, Dr. Jones purchased 700 shares for $17 per share. In April of the previous taxation year, Dr. Jones sold 1,300 shares at $20 per share to buy a gift for his wife. In June of the current taxation year, Dr. Jones purchased 1,100 shares for $28 per share. In October of the current taxation year, Dr. Jones purchased another 1,400 shares for $34 per share. In December of the current year, Dr. Jones sold all of his remaining Westjet shares. There are no brokerage fees on any of the Westjet share transactions. Print Done Dr. James Jones is 36 years old and is in the process of getting a divorce. As part of the divorce proceedings, Dr. Jones must sell a number of his assets and holdings in order to divide the assets of the marriage and pay a large settlement to his former spouse, Janette Jones. Dr. Jones has provided you with the following list of assets that he sold in the current year, including the asset cost and the proceeds of disposition: (Click on the icon to view the list of assets.) Requirements Requirement 1. Calculate the capital gain (or loss) for each of the dispositions in the current taxation year. Fill in the table below showing the capital gain or loss) for each item. (Round your answers to the nearest cent. Enter losses with parentheses or a minus sign.) Asset Description Capital gain (or loss) Sailboat Speedboat Principal Residence Vacant Land Big Pharma Shares Dr. Jones PC Shares Gold Ring Westjet Shares Requirement 2. Calculate the net taxable capital gain for Dr. James Jones for the current year. (Round your answer to the nearest cent.) The net taxable gain for the year is Requirement 3(a). What are the rules in regard to the carry-back and carry-forward rules for capital losses? Do these rules differ from the rules that apply to non-capital losses? Capital loss carryovers can be carried back years and carried forward Capital loss carryovers differ from non-capital loss carryovers as they can only be applied to the extent the taxpayer has included in net income in the taxation year. Requirement 3(b). Capital loss carry-forward: Can a taxpayer choose when to apply capital loss carry-forwards? Give an example of when a taxpayer may choose not to deduct capital loss carry-forwards in the current year, even though the taxpayer has realized a taxable capital gain in the year. Taxpayers can choose when to apply capital loss carryovers as long as the loss carryover is utilized first and there are taxable capital gains included in net income to apply to net capital loss carryover forward. A taxpayer may choose not to apply a capital loss carryover in the taxation year (even if there are taxable capital gains included in net income) if the taxpayer has little to no net income and expects to have even taxable capital gains in a future year. Requirement 3(c). Dr. Jones asks you about the "ordering rules" in regard to loss carry-forwards. Explain your response. Loss carryovers can be applied at the discretion of the taxpayer as long as the loss carryover is utilized first. i . - List of assets Asset Description Proceeds of Disposition Original Price Paid Sailboat $91,000.00 $83,000.00 Speedboat $50,500.00 $71,000.00 Home $395,000.00 $235,000.00 Additional information: The home was the principal residence for Dr. Jones and his former spouse for 10 years, ending in the current taxation year. Last year, Dr. Jones sold his cabin at the lake, which he claimed as his principal residence for two taxation years the cabin at the lake was designated as Dr. Jones's principal residence for the two most recent taxation years.) Therefore, this home cannot be claimed as Dr. Jones's principal residence for those years. Vacant land $46,000.00 $330,000.00 Additional information: Dr. Jones bought this vacant land as an investment property. Since its purchase, the land has been vacant and Dr. Jones has not earned any income on the land, but he paid $1,900 in property taxes and $510 on mortgage interest on the land during this time. $680 per share 510 Big Pharma shares $490 per share Additional information: On the sale of the shares, Dr. Jones paid a brokerage commission of $3,400. 1,100 Dr. James Jones Professional Corporation $3,050 per share $85 per share Additional information: Dr. Jones had to liquidate some shares of his privately owned professional corporation (which operates his dental practice) to pay for a settlement to his former spouse. Dr. Jones paid legal fees related to this sale of shares of $16,580. Please note that these shares do not meet the definition of Qualified Small Business Corporation Shares (QSBC). Gold ring $4,000 $0 Additional information: Dr. Jones inherited this ring from his mother's estate. At the time of his mother's death, the ring had a fair market value of $280. Westjet shares $48 per share (December) Various Additional information: Dr. Jones purchased the Westjet shares over a period of time. Several years ago, he purchased 1,100 shares for $21 per share. In January of the previous taxation year, Dr. Jones purchased 700 shares for $17 per share. In April of the previous taxation year, Dr. Jones sold 1,300 shares at $20 per share to buy a gift for his wife. In June of the current taxation year, Dr. Jones purchased 1,100 shares for $28 per share. In October of the current taxation year, Dr. Jones purchased another 1,400 shares for $34 per share. In December of the current year, Dr. Jones sold all of his remaining Westjet shares. There are no brokerage fees on any of the Westjet share transactions. Print Done Dr. James Jones is 36 years old and is in the process of getting a divorce. As part of the divorce proceedings, Dr. Jones must sell a number of his assets and holdings in order to divide the assets of the marriage and pay a large settlement to his former spouse, Janette Jones. Dr. Jones has provided you with the following list of assets that he sold in the current year, including the asset cost and the proceeds of disposition: (Click on the icon to view the list of assets.) Requirements Requirement 1. Calculate the capital gain (or loss) for each of the dispositions in the current taxation year. Fill in the table below showing the capital gain or loss) for each item. (Round your answers to the nearest cent. Enter losses with parentheses or a minus sign.) Asset Description Capital gain (or loss) Sailboat Speedboat Principal Residence Vacant Land Big Pharma Shares Dr. Jones PC Shares Gold Ring Westjet Shares Requirement 2. Calculate the net taxable capital gain for Dr. James Jones for the current year. (Round your answer to the nearest cent.) The net taxable gain for the year is Requirement 3(a). What are the rules in regard to the carry-back and carry-forward rules for capital losses? Do these rules differ from the rules that apply to non-capital losses? Capital loss carryovers can be carried back years and carried forward Capital loss carryovers differ from non-capital loss carryovers as they can only be applied to the extent the taxpayer has included in net income in the taxation year. Requirement 3(b). Capital loss carry-forward: Can a taxpayer choose when to apply capital loss carry-forwards? Give an example of when a taxpayer may choose not to deduct capital loss carry-forwards in the current year, even though the taxpayer has realized a taxable capital gain in the year. Taxpayers can choose when to apply capital loss carryovers as long as the loss carryover is utilized first and there are taxable capital gains included in net income to apply to net capital loss carryover forward. A taxpayer may choose not to apply a capital loss carryover in the taxation year (even if there are taxable capital gains included in net income) if the taxpayer has little to no net income and expects to have even taxable capital gains in a future year. Requirement 3(c). Dr. Jones asks you about the "ordering rules" in regard to loss carry-forwards. Explain your response. Loss carryovers can be applied at the discretion of the taxpayer as long as the loss carryover is utilized first