Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

In 2018, Kiranjit Dhillon acquired 1,000 shares of Pluton Lid. (a Canadian public corporation) at a cost of $24,000 plus a brokerage commission of $900.

image text in transcribed
In 2018, Kiranjit Dhillon acquired 1,000 shares of Pluton Lid. (a Canadian public corporation) at a cost of $24,000 plus a brokerage commission of $900. During 2018, she received cash dividends of $1,200. In 2019, Pluton failed to pay the cash dividend owing to a cash flow shortage; instead, it issued a stock dividend, whereby Kiranjit received an additional 100 shares. At the time of the stock dividend, the share value was $22 per share. On December 15, 2019, with the company's financial position continuing to decline, Kiranjit sold all of her shares of Pluton for $ 18,000. She felt relieved when the share values declined further over the next two weeks. She incurred brokerage fees of $ 600 on the sale. Early in the new year, Pluton apparently solved its financial crisis by selling an unprofitable subsidiary. Kiranjit's broker recommended that she again invest in Pluton's Kiranjit shares. On January 11, 2020, she purchased 1,000 shares at a cost of $ 15,000 plus brokerage fees of $ 200. In June 2020, she gifted all of her shares in Pluton to her son, who was about to attend university. At that time, the shares were valued at $ 20,000. Calculate Kiranjit's net income for tax purposes for 2018 Property Income Calculate the adjusted cost base of the Pluton shares in 2019 before the sale 2018 Pluton Purchase adjusted cost base (ACB) 2019 Stock dividend Pluton Adjusted Cost Base before sale Calculate Kiranjit's net income for tax purposes due to the transactions for 2019 and 2020 2019 Net Sale Proceeds less Pluton Adjusted Cost Base Capital Loss Superficial loss disallowed Allowable Capital Loss Capital Loss Property income 2020 Purchase Superficial loss from 2019 sale Pluton ACB due to superficial loss Gift to Son less Pluton ACB at time of gift Allowable Capital Loss Capital Loss

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

The Financial Numbers Game

Authors: Charles W Mulford, Eugene E Comiskey

1st Edition

0471770736, 9780471770732

More Books

Students also viewed these Accounting questions