Question 2 Jacoba Brink is currently a very successful website developer. Previously, she worked at Microsoft, and when she left there she made quite a bit of money on her stock options. About 10 years ago, she transferred a large group of investments into a trust in favour of her two children. The fiscal year of the trust ends on December 31, and Ms. Brink has no beneficial interest in either the income or the capital of the trust. Under the terms of the trust, her daughter Kara receives 40 per cent of all the income and her other daughter, Tatiana, receives 35 per cent of this income. Kara is aged 32 and Tatiana is 28. Both children are single and have no current sources of income other than the trust. The undistributed income accumulates within the trust, to be paid out to the daughters at the time of death of Ms. Brink. The income figures for the year ending December 31, 20XX, are as follows: Interest income on GICS $300,000 Eligible dividends from Canadian corporations 675,000 Revenue from rental property 96,000 Cash expenses on rental property 42,000 The rental property was sold on October 1, 20XX, for $1.8 million. 70 per cent of the sales price was allocated to the building, and 30 per cent to the land. The original cost of the apartment building was $1 million, with the same allocations. The apartment building had been transferred into the trust when it was established, and the UCC of the building is $556,000. This is the first disposition of capital property by the trust since it was established. Required A. Calculate the Taxable income of the trust, and for Kara and Tatiana for the year ending 20XX. ( 25 marks) B. Calculate the Federal Tax Payable for the trust for the year ending 20xx. (5 marks) Question 2 Jacoba Brink is currently a very successful website developer. Previously, she worked at Microsoft, and when she left there she made quite a bit of money on her stock options. About 10 years ago, she transferred a large group of investments into a trust in favour of her two children. The fiscal year of the trust ends on December 31, and Ms. Brink has no beneficial interest in either the income or the capital of the trust. Under the terms of the trust, her daughter Kara receives 40 per cent of all the income and her other daughter, Tatiana, receives 35 per cent of this income. Kara is aged 32 and Tatiana is 28. Both children are single and have no current sources of income other than the trust. The undistributed income accumulates within the trust, to be paid out to the daughters at the time of death of Ms. Brink. The income figures for the year ending December 31, 20XX, are as follows: Interest income on GICS $300,000 Eligible dividends from Canadian corporations 675,000 Revenue from rental property 96,000 Cash expenses on rental property 42,000 The rental property was sold on October 1, 20XX, for $1.8 million. 70 per cent of the sales price was allocated to the building, and 30 per cent to the land. The original cost of the apartment building was $1 million, with the same allocations. The apartment building had been transferred into the trust when it was established, and the UCC of the building is $556,000. This is the first disposition of capital property by the trust since it was established. Required A. Calculate the Taxable income of the trust, and for Kara and Tatiana for the year ending 20XX. ( 25 marks) B. Calculate the Federal Tax Payable for the trust for the year ending 20xx
