Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

It is late March 2020. You have just met with your client Ahmed about his taxes. Ahmed has several tax issues for the 2019 taxation

It is late March 2020. You have just met with your client Ahmed about his taxes. Ahmed has several tax issues for the 2019 taxation year that he needs your help with. 1. Ahmed has two T4 slips from 2019, as he moved during the year: Employment income CPP deducted El deducted RPP contributions Pension adjustment Income tax deducted Ontario employer Nova Scotia employer $62,200 $65,000 2,749 2,749 860 860 2,500 1,500 4,000 3,000 12,000 12,500 packing and transporting furniture and belongings 2. Ahmed and his daughter Zeinab moved from Ontario to Nova Scotia during 2019 for work, which he began right away. Their moving expenses include the following items: Movers - Selling costs of Ontario home Legal costs to acquire new home in Nova Scotia $6,000 4,000 1,250 Costs related to vacant former home while up for sale 5,500 Costs to repaint new home 4,000 Gas to drive family car to Nova Scotia 200 Two nights in hotel for the family 400 Meals during the trip to Nova Scotia 200 For tax purposes, Ahmed would like to use the detailed method for calculating gas and meals expenses related to moving. 3. Ahmed owned a rental property in Toronto for several years. The property cost $500,000, with $150,000 allocated to the land and $350,000 for the building. It was put up for sale at the end of 2018 and was sold in July 2019 for $650,000, with $175,000 allocated to the land. The UCC balance on December 31, 2018, was $322,000. In anticipation of the sale, the tenant had moved out on December 31, 2018, and the property had been vacant until it was sold. Ahmed used the proceeds of the sale to purchase another residential rental property in Halifax on August 1, 2019. He does not want to defer any gains or recapture. Ahmed gave you the following income and expenses for this property for the year, along with its cost: Rental income Total expenses Total cost of property Portion of cost allocated to land $ 30,000 36,000 480,000 80,000 Ahmed also advises you that he sold a piece of vacant land at a significant loss this year. He had planned to build a rental property on the land but learned after purchasing it that it was highly polluted. The cost of this land was $200,000, and it was sold for $30,000 in 2019. 4. Ahmed has a T5 slip from 2019 indicating that he earned an eligible dividend of $20,000 and interest income of $300. 5. For the 2019 taxation year, Ahmed made RRSP contributions of $3,000. This is his first RRSP contribution, and his RRSP deduction limit for 2019 is $120,000. 6. Ahmed pays spousal support payments to his ex-wife of $500 per month pursuant to a legal agreement. He is behind in his payments and was only able to pay $3,500 in 2019. Required: a) Calculate the following for the 2019 taxation year. Provide explanations for omitted amounts. i) Ahmed's rental income and any taxable capital gains and allowable capital losses from the sale of the real estate properties that he sold during 2019 (4.5 marks) ii) Ahmed's deductible moving expenses (4.5 marks) b) Calculate net income for tax purposes for Ahmed for 2019. (6.5 marks) c) Determine Ahmed's estimated RRSP deduction limit for 2020. (4.5 marks) Note: Round all amounts to the nearest dollar and ignore GST and provincial taxes. Show the full detail of all steps in your calculations, even if the result is zeroimage text in transcribedimage text in transcribed

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

Contemporary Environmental Accounting Issues Concepts And Practice

Authors: Stefan Schaltegger, Roger Burritt

1st Edition

1874719349, 9781874719342

More Books

Students also viewed these Accounting questions

Question

The concept and application of strengths.

Answered: 1 week ago

Question

What do you think your problem does to you?

Answered: 1 week ago