Problem 3: Chapter 8: Capital Gains
Instructions:
Mr. Geoffrey Guo had a variety of transactions during the 2019 year. Determine the total taxable capital gains included in Mr. Guo's division B income. The transactions included:
1. On January 1, 2019, Geoffrey purchased 2100 shares of Ted Ltd. at $25 per share and 500 shares at $30 per share on February 5, 2019. He sold 250 of these shares on July 20, 2019 at $23 per share.
2. On September 30, 2019, he purchased an additional 850 shares of Ted. Ltd. at $29 per share. On December 30, 2019, he sold 280 Ted Ltd. shares at $65 per share.
3. Geoffrey owns 3200 shares of Baxter Ltd. with an adjusted cost base of $13 per share. On May 15, 2019, he sells all 3200 Baxter Ltd. shares at $6 per share. On May 20, 2019, he acquires 1250 shares of Baxter Ltd. at a cost of $4 per share and is still holding these shares at the end of the year.
4. On July 6, 2019, Geoffrey sells a capital property (28 Malpass Road) with an adjusted cost base of $145000 for proceeds of disposition of $380000. In 2019, he receives $80,000 in cash, along with the purchaser's note for the balance of the proceeds. The note is to be repaid in full ($300000) in five years. Assume that Geoffrey deducts the maximum capital gains reserve.
5. In October, 2018, Geoffrey sold a different capital property (17 Greenview Ave) with an adjusted cost base of $115000 for proceeds of disposition of $210000. In 2018, he received $75,000 in cash, along with the purchaser's note for the balance of the proceeds. The note is to be repaid at the rate of $2,500 per year beginning in 2019. He receives the 2019 payment of $2,500 in full. Assume that Geoffrey deducts the maximum capital gains reserve in both 2018 and 2019.
6. Geoffrey purchased his first home in London, Ontario in 2008 at a cost of $63000. In 2012, he also purchased a cottage in Muskoka for $100000. In November, 2019, both properties are sold, the house for $219000 and the cottage for $164000. Both of these properties can qualify as a principal residence for him. He will designate the principal residence exemption in such a way that will minimize the taxable capital gains that he must report on the sale of these two properties.
7. Geoffrey owned a personal sailboat with an adjusted cost base of $30000. He sold it for $72000 in October 2019.
8. Geoffrey personally owned an oil painting that he purchased many years ago for $550. He sold it for $10000 in June 2019.
9. Geoffrey kept a bench on the front porch of his home which cost him $1700 several years ago. He sold it for $200 in January 2019.
Required: Determine the total net taxable capital gains included in paragraph 3(b) of Mr. Guo's divison B income. Respond on "P3- Response" tab. Final answers for each line item should be typed into the yellow boxes. Please show all your backup work in the designated green space for full marks.
Problem 3- put all of your final answers in the yellow boxes below, and show any additional work in the green identified area. Losses and/or reserves should be depicted with a negative number; gains with a positive number.
Item number	Relevant Asset Disposal date	Asset name	Description of tax implication associated with asset disposal:
1	July 20, 2019	Ted. Ltd shares	Allowable capital loss- Ted Ltd: July 20, 2019: (negative)
2	December 30, 2019	Ted. Ltd shares	Taxable capital gain- Ted Ltd: December 30, 2019:
3	May 15, 2019	Baxter Ltd. Shares	Allowable capital loss- Baxter Ltd.: (negative)
4	July 6, 2019	28 Malpass Road	A) Capital gain before considering 2019 reserve:
4	July 6, 2019	28 Malpass Road	B) Less: 2019 reserve taken: (negative)
4	July 6, 2019	28 Malpass Road	C) 2019 Taxable capital gain [(A+B) *50%]		0.00
5	October 2018	17 Greenview Ave	A) 2018 Reserve Added to Income in 2019:
5	October 2018	17 Greenview Ave	B) 2019 Reserve taken: (negative)
5	October 2018	17 Greenview Ave	C) 2019 Taxable capital gain [(A+B)*50%]		0.00
6	November 2019	London Ontario Home	2019 taxable capital gain (after principal residence exemption)
6	November 2019	Muskoka Cottage	2019 taxable capital gain (after principal residence exemption)
7	October 2019	Sailboat	2019 taxable capital gain
8	June 2019	Oil painting	2019 taxable capital gain
9	January 2019	Bench	2019 allowable capital loss
			3(b) Total 2019 net taxable capital gains		0.00