Owen Winehouse Case

Owen Winehouse is 51 years old and has been married to Arlene Winehouse for over 25 years. Having made his fortune through a widely successful initial public offering, he devotes most of his time to mentoring young entrepreneurs and participating in volunteer activities.

Information relevant to Owens 2017 tax return follows.

During 2017, Owen received eligible dividends from Canadian public companies in the amount of $32,400.

For several years, Owen has owned 100 percent of the shares of an eligible small business corporation. The adjusted cost base of these shares is $520,000. On July 1, 2017, these shares are sold for $600,000. Assume none of the gain is eligible for the lifetime capital gains deduction. Of the total proceeds, $500,000 is immediately invested in another eligible small business corporation. During 2017, the new small business corporation paid non-eligible dividends of $22,000.

The residence occupied by Owen and Arlene was purchased in 2003 for $320,000. As their space needs have grown considerably, they have decided to replace this property. It is sold during

February, 2017 for $375,000. Selling costs, including commissions, total $20,000. Their new residence, purchased at the beginning of 2017, cost $458,000.

In January of this year, Owen purchased a cottage to operate as a rental property. The purchase price was $235,000, of which $75,000 can be allocated to the land. Owen plans to never claim this property as a principal residence and will take CCA on it instead.

In addition, Owen spent $42,000 furnishing the cottage. All of the furnishings are Class 8 assets.

On March 1, 2017, it is rented for $3,000 per month for the remainder of the year. Expenses, other than CCA, total $22,000 for March 1 to December 31, 2017.

For several years, Owen has been interested in French common stock Debit Agricole (DA). The stock trades in Euros () and Owens first purchase of 1,000 shares was made on October 1, 2015 for 14.00 per share. He acquired the Euros at a rate of 1.00 = $1.57. Subsequent transactions were as follows:

November 4, 2015

Quantity Purchased (sold) 300

Price per share 14.50

Exchange rate Canadian $1.55

January 6, 2016

Quantity Purchased (sold) (400)

Price per share 15

Exchange rate Canadian $1.54

June 24, 2017

Quantity Purchased (sold) 600

Price per share 15.50

Exchange rate Canadian $1.55

On December 2, 2017, he sells all of his shares for 13.00 per share. At this time, = 1.35. The Euros are immediately converted into Canadian Dollars.

Owen sells his vintage power boat. He had purchased this boat several years ago in damaged condition for $10,000. He subsequently spent $24,627 restoring it to mint condition. As a result, he was able to sell it for $50,000 during 2017.

During 2017 he sold his stamp collection for $12,000. The total cost of the collected stamps was $8,000. He also sold an oil painting for $700. This paining, which he had always hated, had been a gift from Arlenes mother. At the time of the gift, the painting had a fair market value of $4,000.

Required: Using the formatted Excel spreadsheet provided, determine Owens minimum Net Income for Tax Purposes for 2017.

Please show all calculations and explanations. For items with more complex calculations (2,4,5,6,7), I have provided space on a separate worksheet. If no adjustment is necessary for a particular item, please indicate this and explain why. Each line item corresponds to a number in the question.

Income from Property Item- Explanation- Interest - Dividend -Net Rental -Taxable Capital Gains 1 2 3 4 5 6 7 Minimum Net Income for Tax Purposes

CCA Deduction:

1

2

3

4

5

6

7

8

9

10

Class

UCC @ beginning of the year

Cost of acquisitions during the year

Proceeds of dispositions during the year (amount not to exceed the capital cost)

Net UCC (Col 2+3-4)

Adj for Acquisitions *(col 3-4) (half year rule)

Base amt for CCA (col5-6)

CCA rate %

CCA for the year (col 7x8) (or lower amt as elected)

UCC @ end of year (col 5-9)

Maximum CCA

-

5. Shares in Debit Agricole

Calculating adjusted cost base:

exchange rate

Value in

Purchase/Sale Date

# shares

price ()

Cdn$

Cdn$/share

6. Sale of Vintage Power boat:

7. Sale of Oil Painting and Stamp Collection:

Hint: don't forget about the $1,000 floor rule for Personal Use Property!