Mr. Rhodes purchased a large tract of land near Edmonton 15 years ago for $750,000. It was sold in April 2022 to a developer for $2,500,000. Mr. Rhodes received a down payment of $625,000 25%) and accepted a 25-year, 8% mortgage for the balance of $1,875,000. The payments on the mortgage will begin in 2023 and will require the repayment of $75,000 (3% of the proceeds of disposition) per year in principal. Mr. Rhodes wishes to defer income taxes through the use of capital gain reserves to the maximum extent possible. 

Required: 

Calculate the capital gains consequences of this sale for 2022 up to and including 2028, assuming that Mr. Rhodes claims the maximum capital gains reserve in 2022 and in all subsequent years.

Mr. Stewart Simms has lived most of his life in Vancouver. In 1998, he purchased a three-bedroom home near English Bay for $125,000. In 2002, he acquired a cottage in the Whistler ski area at a cost of $40,000. In all subsequent years, he has spent at least a portion of the year living in each of the two locations. When he is not residing in these properties they are left vacant. On October 1, 2022, Mr. Simms sold the English Bay property for $915,000 and the cottage at Whistler for $720,000. Mr. Simms wishes to minimize any capital gains resulting from the sale of the two properties.

 Required:

Describe how the two residences should be designated to optimize the use of the principal residence exemption. In addition, calculate the amount of the taxable capital gains that would arise under the designation that you have recommended. Show all supporting calculations.