Question
Question 1 (1 point) Saved Taxpayer A purchased a residential rental property on April 15, 2020. They paid $300,000 cash for the building and an
Question 1 (1 point)
Saved
Taxpayer A purchased a residential rental property on April 15, 2020. They paid $300,000 cash for the building and an additional $540 for eligible rental expenses during 2020. They rented the property on May 1 to long term tenants for $2,500 per month. On their 2020 tax return what is the net rental income they should report?
Question 1 options:
| $7,918 |
| $7,378 |
| $19,460 |
| $1,460 |
Question 2 (1 point)
Of the following statements concerning the tax treatment of interest income, which one is NOT correct?
Question 2 options:
| If there is accrued interest on a security, the seller includes the accrued interest in income and the purchaser deducts a corresponding amount from the interest received on the bond |
| Accrued interest from the date of the last interest payment date will be added to the purchase price of a security. |
| Individuals must accrue interest using the cash basis. |
| Corporations must accrue interest on a daily basis. |
Question 3 (1 point)
Julio has a savings account in a foreign country. The account earned $5,000 interest during 2020 but he only received $4,500 since $500 for foreign taxes was withheld by the bank. All amounts are stated in Canadian dollars. The effect on Julio's 2020 tax return is:
Question 3 options:
| An increase in taxable income of $5,000 and a foreign tax credit of $75 |
| An increase in taxable income of $4,500 and a foreign tax credit of $0 |
| Nothing since the interest was earned outside of Canada |
| An increase in taxable income of $5,000 and a foreign tax credit of $500 |
Question 4 (1 point)
During 2020 Erin received eligible dividends of $800, non-eligible dividends of $600 and foreign dividends of $900 (10% foreign tax or $100 was withheld at source). Her 2020 net property income for tax purposes is:
Question 4 options:
| $2,794 |
| $2,694 |
| $2,748 |
| $2,648 |
Question 5 (1 point)
Taxpayer A purchased a newly issued $20,000 corporate bond for $19,500 on November 1, 2020. The bond matures on October 31, 2025 and has an annual interest rate is 5% which is paid on October 31 of each year. What is the total interest income taxpayer A must report on their 2020 and 2021 tax returns if they want to minimize the interest recognized for tax purposes?
Question 5 options:
| $0 in 2020 and $1,000 in 2021 |
| $167 in 2020 and $1,000 in 2021 |
| $167 in 2020 and $833 in 2021 |
| $0 in 2020 and $975 in 2021 |
Question 6 (1 point)
Taxpayer A has two residential rental properties that are mortgaged. Both properties qualify for Class 1 with a CCA rate of 4 percent. At the beginning of the current taxation year, Property A has a UCC of $500,000 and Property B has a UCC of $1,100,000. Before taking into account any CCA for the current year, Property A earned net rental income of $43,000, and Property B had a net rental loss of $27,000. What is the maximum amount of CCA taxpayer A will be able to claim this year?
Question 6 options:
| nil |
| $44,000 |
| $16,000 |
| $20,000 |
Question 7 (1 point)
Taxpayer A owns a building and is renting units to tenants. Which one of the following expenditures is not a deduction for tax purposes?
Question 7 options:
| Cost of a new refrigerator. |
| Cost of repairing the front stairs. |
| Interest paid on the mortgage on the building. |
| Cost of painting the interior of a unit. |
Question 8 (1 point)
Of the following statements with respect to rental properties, select the one which is NOT correct:
Question 8 options:
| If a new rental property is acquired, put into a separate CCA class, and is used more than 90 percent for non-residential purposes, it is eligible for an enhanced CCA rate of 10 percent. |
| The deduction of CCA cannot be used to create or increase a rental loss. |
| Every rental property with a cost in excess of $50,000 must be allocated to a separate CCA Class. |
| The short fiscal period rules (i.e. a taxation year <365 days) do NOT apply to the calculation of CCA on a rental property owned by an individual. |
Step by Step Solution
There are 3 Steps involved in it
Step: 1
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-text-image.webp)
Get Instant Access with AI-Powered Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Step: 3
![blur-text-image](https://dsd5zvtm8ll6.cloudfront.net/includes/images/document_product_info/blur-subtext-image.webp)
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started