Problem 13 Mr. Richmond, a new client, has invested in rental properties, principal residences and other capital property with inheritance monies and other liquid cash. He provides you with the following information with respect to his 2021 taxation year. Mr. Kichmond is employed by Wealth Inc., a Canadian-controlled private corporation, and received the following income and benefits: (2) Mr. Richmond paid professional fees of $500 to the Professional Engineers of Ontario. (3) Mr. Richmond sold two lots of his Wealth Inc. employee stock option shares. He provides you with the following: 1st lot - 450 shares sold on March 15, 2022, for $26.50 per share. These shares were exercised on February 2015 for $8. The fair market value of each share on the date exercised was $10.50. The fair market value at the date of grant was $8. 2nd lot - 600 shares sold on December 5,2022 , for $25 per share. These shares were exercised on April 12, 2021, for $15. The fair market value of each share on the date exercised was $21. The fair market value at the date of grant was $17. (4) Mr. Richmond received an interest-free loan of $9,000 on March 12, 2022, to enable him to purchase the 2nd lot of shares of Wealth Inc. The loan was outstanding until the shares were sold on December 5 , at which time the loan was repaid. Assume that the prescribed rate throughout the year was 3%. In addition, during 2022, Mr. Richmond received the following income from various sources including certain capital dispositions. (A) Mr. Richmond sold the following assets: (B) During 2022, Mr. Richmond sold his two residences, in order to purchase a larger home in an expensive suburb. The following facts relate to these two residences: 182 selling costs. Of the proceeds, $140,000 was for the land. monthly payments are $450 per month, of which $300 per month represents interest. (D) Mr. Richmond received dividends from the following investment: taxed at the low corporate rate) . Fund indic reinvestment resulted in the purchase of 3.845 units at the market value of $12.044 per unted 2022 income allocation resulted, on reinvestment of the $1,544.97, in the purchase of 119.358. the market value of $12.944 per unit. Late in 2022 , after the income allocation. Mr. Rich 1,000 units for a total of $12,881. (F) Mr. Richmond sold a $100,000 Government of Canada bond for $115,327. This bond paid interest semi-annually at an interest rate which was much higher than current interest rates. The proceeds received of $115,327 included accrued interest of $5,327. Mr. Richmond had purchased the bonds on the open market for $98,000. (G) Mr. Richmond has a listed personal property loss, carried forward from 2016, of $700. Mr. Richmond has asked you to calculate his Division B income for 2022. Assume that he claimed $60,000 of his capital gains exemption in prior years. Ignore the effects of any leap year. Problem 13 Mr. Richmond, a new client, has invested in rental properties, principal residences and other capital property with inheritance monies and other liquid cash. He provides you with the following information with respect to his 2021 taxation year. Mr. Kichmond is employed by Wealth Inc., a Canadian-controlled private corporation, and received the following income and benefits: (2) Mr. Richmond paid professional fees of $500 to the Professional Engineers of Ontario. (3) Mr. Richmond sold two lots of his Wealth Inc. employee stock option shares. He provides you with the following: 1st lot - 450 shares sold on March 15, 2022, for $26.50 per share. These shares were exercised on February 2015 for $8. The fair market value of each share on the date exercised was $10.50. The fair market value at the date of grant was $8. 2nd lot - 600 shares sold on December 5,2022 , for $25 per share. These shares were exercised on April 12, 2021, for $15. The fair market value of each share on the date exercised was $21. The fair market value at the date of grant was $17. (4) Mr. Richmond received an interest-free loan of $9,000 on March 12, 2022, to enable him to purchase the 2nd lot of shares of Wealth Inc. The loan was outstanding until the shares were sold on December 5 , at which time the loan was repaid. Assume that the prescribed rate throughout the year was 3%. In addition, during 2022, Mr. Richmond received the following income from various sources including certain capital dispositions. (A) Mr. Richmond sold the following assets: (B) During 2022, Mr. Richmond sold his two residences, in order to purchase a larger home in an expensive suburb. The following facts relate to these two residences: 182 selling costs. Of the proceeds, $140,000 was for the land. monthly payments are $450 per month, of which $300 per month represents interest. (D) Mr. Richmond received dividends from the following investment: taxed at the low corporate rate) . Fund indic reinvestment resulted in the purchase of 3.845 units at the market value of $12.044 per unted 2022 income allocation resulted, on reinvestment of the $1,544.97, in the purchase of 119.358. the market value of $12.944 per unit. Late in 2022 , after the income allocation. Mr. Rich 1,000 units for a total of $12,881. (F) Mr. Richmond sold a $100,000 Government of Canada bond for $115,327. This bond paid interest semi-annually at an interest rate which was much higher than current interest rates. The proceeds received of $115,327 included accrued interest of $5,327. Mr. Richmond had purchased the bonds on the open market for $98,000. (G) Mr. Richmond has a listed personal property loss, carried forward from 2016, of $700. Mr. Richmond has asked you to calculate his Division B income for 2022. Assume that he claimed $60,000 of his capital gains exemption in prior years. Ignore the effects of any leap year
