It is January 31, 2021 and Bryan Ritz is sitting down with you, student, trying to determine if he should sell some investments with accrued losses to offset capital gains. Bryan student, I recently started my business, Healthy Solutions Marketing (HSM). I undertook a number of transactions in order to raise capital for the business and I want to know what my NITP is in 2020 so that I can have a sense of the taxes that I will need to pay. this student: Lets see what transactions have happened this year. Bryan: I sold a number of personal investments during the year in order to raise funds to startup the business. Per Bryans investment statement - transactions that occurred during the year: January 15, 2020 Purchased 1,000 Goldcorp (non-CCPC) shares @ $14.25 per share January 17, 2020 Purchased 400 Goldcorp shares @ $14.75 per share January 18, 2020 Received 600 Goldcorp shares from his dads estate. (Share were purchased for $7 per share and the fair market value was $12.00 per share at the time of his dads death. The shares were immediately distributed to the beneficiaries after death.) January 20, 2020 Sold 1800 Goldcorp shares @ $17.25 per share. January 21, 2020 Purchased 300 Goldcorp shares @ $15.75 per share. February 9, 2020 Purchased 500 Samsung shares @ $19.00 per share February 10, 2020 Sold 500 Samsung shares @ $16.50 per share. June 20, 2020 Purchased 300 Samsung Shares @ $15.00 per share. October 9, 2020 Sold 300 Samsung Shares @ $2.00 per share. October 15, 2020 Purchase 200 Samsung shares @ $3.50 per share Other Events In order to save on rent, Bryan converted 20% of his house into a home office in 2019 (The house was purchased on December 15, 2018 at a cost of $725,000 of which the cost base of the building and land was $500,000 and $225,000 respectively) which he exclusively used for HSM business. At the time of conversion, the fair value of the property was $900,000, of which the value of the building and land was $630,000 and $270,000 respectively. In 2020, Bryan decided to move out of the house and make the 80% space he was living in available for rent. For the 80% portion not used by the business, Bryan performed structural alterations and added in separate entrances as well as additional plumbing to support various appliances. He continued to use 20% of the building as HSM offices. At the time of conversion, the fair value of the property was $1.1 million of which the value of building and land was $760,000 and $340,000 respectively. On April 1, 2020, Bryan tried to collect on some outstanding loans in order to finance his business but was only able to collect $500,000 on a $700,000 loan made to Chriss Vacuum co, (a SBC) as the company went bankrupt due to a pandemic wiping out the business that occurred in the region. Bryan also complained that his silly wife decided to pretend she was James Bond after watching a prescreening of No Time To Die and his Aston Martin Valhalla came back with bullet holes. He ended up selling it for scrap for $650. The car was purchased for $350,000 as it was one of the actual cars used on set. His wife, who was apologetic, helped Bryan sell his Antique Piano for proceeds of $150,000. Bryan was quite happy with this sale as the antique piano was gifted to him by his Mom last year and did not cost him any money (The fair market value of the piano at the time of the gift was $175,000). Bryan also bought storage lockers two years ago and kept some of the collectibles but decided to sell some artwork this year for a $400 profit. (ACB = $200 and Proceeds of disposition = $600). He also sold a coin collection for a $5,000 profit (ACB = $600 and Proceeds of Disposition = $5,600) Historical Information Bryan realized a taxable capital gain in 1989 on disposition of SBC shares. A capital gains deduction of $15,000 was taken to offset against the taxable capital gain. At the beginning of 2020, there was an available listed personal property loss carryover from 2016 in the amount of $1,850. Bryan had a tax refund in 2018 in the amount of $35,000 and taxes payable in 2019 in the amount of $55,000. Required

Part I Given the following information, calculate the values that will be recorded in the relevant S3 paragraphs for an individual for calendar 2020. Clearly label any items not included in your calculation as n/a. Cite all triggers and clearly show all your steps in your work. Assume that Brian deducted MAXIMUM CCA each year and that no elections will be filed. Clearly indicate any tax rules (excluding elections) that could apply to save Bryan taxes.

Part II Is there an election that could be filed that would mitigate any of the taxable capital gains that are generated in this problem? If the election is filed what consequence would arise that could mitigate some of the tax consequences? Why is it that an election would be necessary?

Part III Assume that Bryan has estimated that he will have taxes payable of $95,000 in 2020, what are the various options available to him with respect to required instalments in 2020. What amounts would he be paying under each option and when would he need to make each payment? What is the balance due date and the filing deadline for his T1?

Part IV With respect to Bryan converting 80% of his space to a rental property, why is it significant that he made structural changes to the house?

THis topic comes from taxation 1