For each of the following trusts settled by Mrs. A explain: The tax consequences of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
For each of the following trusts settled by Mrs. A explain: • The tax consequences of the transfer of property by Mrs. A to the trust; • The rate of tax payable by the trust; • The tax consequences of the transfer of property from the trust to the beneficiary a. On June 1, 2020, Mrs. A settled a painting on her daughters, B and C, in trust for her grandchildren. The painting has a cost to Mrs. A of $500 and a fair market value of $7,000. b. Mrs. A provides in her will that her shares of ABC Co. are to be held in trust for her grandchildren. These shares have a cost to Mrs. A of $10,000 and a fair market value of $35,000. Part B Mr. B died on March 15, 2020. Mr. B's will provides that the residue of his estate is to be transferred to a trust for the benefit of his wife, Mrs. B, a resident of Canada. The will provides that the income of the trust is to be paid to Mrs. B. The will also allows the executors to pay out capital for the benefit of Mrs. B. On Mrs. B's death, the trusť's assets are to be distributed to the Bs' children. Mr. B's assets include shares of XYZ Inc., a public company, which were purchased about 25 years ago for $1,000 and have a fair market value at his death of $100,000. (A) Explain the tax consequences to Mr. B arising out of the transfer of the ABC Inc. shares to the trust for Mrs. B. (B) Explain the tax consequences to the trust of holding the shares and earning dividend income. (C) Explain the tax consequences if the shares are transferred to Mrs. B. (D) Explain the tax consequences if the shares are still held by the trust at the time Mrs. B dies. (E) Explain how your answer to (A) would be different if Mr. B's will provided the trustees with the power to encroach on capital for the benefit of the Bs' children. Part C Ms. C, a lawyer, died on June 1, 2020. Ms. C was divorced at the time of her death. Under the terms of her will, her estate is to be distributed equally to her 2 adult children. At the time of death, Ms. C owned investments in publicly traded securities, RRSPS, a house and cottage, artwork and personal properties as well as an interest in her professional partnership. The executor of her estate is her longtime partner Ms J. You have agreed to advise the executor as follows: (A) Explain the tax consequences to Ms. C at the time of her death related to the properties she owned at that time. (B) Explain the tax treatment of the estate arising on Ms. C's death. (C) Explain the tax consequences of the distribution of properties from Ms. C's estate to her children. For each of the following trusts settled by Mrs. A explain: • The tax consequences of the transfer of property by Mrs. A to the trust; • The rate of tax payable by the trust; • The tax consequences of the transfer of property from the trust to the beneficiary a. On June 1, 2020, Mrs. A settled a painting on her daughters, B and C, in trust for her grandchildren. The painting has a cost to Mrs. A of $500 and a fair market value of $7,000. b. Mrs. A provides in her will that her shares of ABC Co. are to be held in trust for her grandchildren. These shares have a cost to Mrs. A of $10,000 and a fair market value of $35,000. Part B Mr. B died on March 15, 2020. Mr. B's will provides that the residue of his estate is to be transferred to a trust for the benefit of his wife, Mrs. B, a resident of Canada. The will provides that the income of the trust is to be paid to Mrs. B. The will also allows the executors to pay out capital for the benefit of Mrs. B. On Mrs. B's death, the trusť's assets are to be distributed to the Bs' children. Mr. B's assets include shares of XYZ Inc., a public company, which were purchased about 25 years ago for $1,000 and have a fair market value at his death of $100,000. (A) Explain the tax consequences to Mr. B arising out of the transfer of the ABC Inc. shares to the trust for Mrs. B. (B) Explain the tax consequences to the trust of holding the shares and earning dividend income. (C) Explain the tax consequences if the shares are transferred to Mrs. B. (D) Explain the tax consequences if the shares are still held by the trust at the time Mrs. B dies. (E) Explain how your answer to (A) would be different if Mr. B's will provided the trustees with the power to encroach on capital for the benefit of the Bs' children. Part C Ms. C, a lawyer, died on June 1, 2020. Ms. C was divorced at the time of her death. Under the terms of her will, her estate is to be distributed equally to her 2 adult children. At the time of death, Ms. C owned investments in publicly traded securities, RRSPS, a house and cottage, artwork and personal properties as well as an interest in her professional partnership. The executor of her estate is her longtime partner Ms J. You have agreed to advise the executor as follows: (A) Explain the tax consequences to Ms. C at the time of her death related to the properties she owned at that time. (B) Explain the tax treatment of the estate arising on Ms. C's death. (C) Explain the tax consequences of the distribution of properties from Ms. C's estate to her children.
Expert Answer:
Answer rating: 100% (QA)
According to the CRA the tax ACT regards the body of the trustee as a separate taxable body The Canadian federal income tax is a system of administration undertaken by the Canadian Revenue Agency were ... View the full answer
Related Book For
Chemistry The Central Science
ISBN: 978-0321696724
12th edition
Authors: Theodore Brown, Eugene LeMay, Bruce Bursten, Catherine Murphy, Patrick Woodward
Posted Date:
Students also viewed these accounting questions
-
Which of the following is an example of capital expenditure? A Purchased a pencil sharpener at a cost of Rs.2 B C D Installing an escalator at cost of Rs.5,600 in a three storey building which had...
-
For each of the following payroll-related taxes, indicate whether they generally apply to (a) Employees only, (b) Employers only, or (c) Both employees and employers: 1. Federal income tax 2....
-
For each of the following payroll-related taxes, indicate whether it generally applies to (1) Employees only, (2) Employers only, or (3) Both employees and employers: a. Federal income tax b. Federal...
-
Find the smallest positive angle and the smallest negative angle (numerically) coterminal with but not equal to the given angle. 47.0
-
The cost function for Acme Laundry is C( q) = 10 + 10q + q2, so its marginal cost function is MC = 10 + 2q, where q is tons of laundry cleaned. Derive the firms average cost and average variable cost...
-
At December 31, 2012, Fell Corporation had a deferred tax liability of $680,000, resulting from future taxable amounts of $2,000,000 and an enacted tax rate of 34%. In May 2013, a new income tax act...
-
Does a covenant represent a prevention against issuing new debt or does it ensure that shareholders/management will enter into discussions with creditors?
-
Ronen Consulting has just realized an accounting error that has resulted in an unfunded liability of $398,930 due in 28 years. In other words, the company will need $398,930 in 28 years. Toni...
-
Probability Ques ch of the following is NOT a conclusion of th ose the correct answer below. A. The mean of all sample means is the po
-
Cecil C. Seymour is a 64-year-old widower. He had income for 2022 as follows: The cost of the annuity was $46,800, and Cecil was expected to receive a total of 260 monthly payments of $450. Cecil has...
-
Discuss the current economic climate and how it affects the financial position of Dentsply Sirona. Research the industry in which the company operates and discuss whether the economic climate affects...
-
Lynch Company manufactures and sells a single product. The following costs were incurred during the company s first year of operations: Variable costs per unit: Manufacturing: Direct materials $ 1 1...
-
Presented below are two independent transactions. Both transactions have commercial substance. 1. 2. Pronghorn Co. exchanged old trucks (cost $64,000 less $19,000 accumulated depreciation) plus cash...
-
Veritek Wholesalers operates at capacity and sells furniture items to four department-store chains (customers). Mr.\ Veritek commented, We apply ABC to determine product-line profitability. The same...
-
Hemming Company reported the following current - year purchases and sales for its only product. Date Activities Units Acquired at Cost Units Sold at Retail January 1 Beginning inventory 2 5 0 units @...
-
XYZ company has just completed its second year of operations. At the beginning of its rst scal year, the company purchased some equipment for $700,000 and estimated that the equipment would have a...
-
Via Gelato is a popular neighborhood gelato shop. The company has provided the following cost formulas and actual results for the month of June: Revenue Raw materials Wages $ 7,100 Utilities $ 3,130...
-
Complete the equations for the following equilibria and calculate Keq where the Keq expression includes [HO]. Be sure to enter Keq in proper scientific notation. (a) ammonia (acting as a base) reacts...
-
Calculate (a) The number of grams of solute in 0.250 L of 0.175 M KBr
-
Phenylacetic acid (C6H5CH2COOH) is one of the substances that accumulates in the blood of people with phenylketonuria, an inherited disorder that can cause mental retardation or even death. A 0.085 M...
-
Write the chemical formula for each of the following, and indicate the oxidation state of the halogen or noble-gas atom in each: (a) Calcium hypobromite (b) Bromic acid (c) Xenon trioxide (d)...
-
The balance sheets of Parkway plc for 20X7 and 20X8 are given below, together with the profit and loss account for the year ended 30 June 20X8. 1 The freehold land and buildings were purchased on 1...
-
Aspirations Ltd commenced trading as wholesale suppliers of office equipment on 1 January 20X1, issuing ordinary shares of 1 each at par in exchange for cash.The shares were fully paid on issue, the...
-
The historical cost accounts of Smith plc are as follows: 1 Land and buildings were acquired in 20X0 with the buildings component costing 800,000 and depreciated over 40 years. 2 Share capital was...
Study smarter with the SolutionInn App