Rachna Thapa: ACC $1027$ HAND IN ASSIGNMENT #$2$

Chapters $6-7-8$

Please respond on excel only and $1$ tab only otherwise the assignment will not be Graded

John Lackey lives in Northern Ontario. He is an employee of the Canadian Tire Corporation. In $2023$ his employment income was $$61,500\mathrm{.}00($t$-4).$ Also he received interest income of $$2,600\mathrm{.}00$ and taxable non eligible dividend income of $$5,000.$ This dividend also has a dividend tax credit of $$1,500.$

John also owns a sole proprietorship called Lackey's Small Repairs. The business was profitable until $2023$ where he had a business loss of $$10,750\mathrm{.}00.$ He tells you that in the addition of the business loss, he has obsolete inventory that he has accumulated over the year. The inventory cost of $$20,750$ and Mr$.$ Lackey was wondering if he could get capital loss to apply to his capital gains for the current year.

In addition, Mr$.$ Lackey also has net rental income of $ $4,500.$

Mr$.$ Lackey also has investments in share of Bell Canada and Enbridge Inc.In $2020$ he purchased Bell shares $2000$ @ $$200\mathrm{.}00$ each and Enbridge $1,500$ shares @ $75\mathrm{.}00$ each. During $2023$ the year he sold Bell Shares $200$ @ $$175\mathrm{.}00$ and Enbridge shares $200$ @ $$150\mathrm{.}00.$ These transactions were on December $1,2023.$ On December $20$ Mr$.$ Lackey purchased $300$ share of Bell Stock @ $$180\mathrm{.}00$ and $250$ shares of Enbridge Stock @ $$145\mathrm{.}00.$ MR Lackey is hoping that the capital loss will negate the capital gains.

Mr$.$ Lackey sold his Principal Residence in June $2023$ for $ $750,000$ and his purchase price was $$425,000\mathrm{.}00$ back in $1999.$ He thien moved to his camp which used to be rented out until June $2023.$ The cost of the camp and the UCC was $$250,000\mathrm{.}00$ and the FMV was $$375,000($Mr$.$ Lackey never took CCA as he was going to retire at camp, he purchased in $2010)$

Please calculate the division B Income, Capital Loss carry forward $($if any$).$ Show all of your calculation for the stock transactions for the inclusion or exclusion in the Division B Income. Also show the ACB of the Bell and Enbridge Stock.

Show all calculation with regards to the principal residence rule and the tax consequence of moving to the Camp. Please note any solution that is $0\mathrm{.}00$ insert this amount or put nil, otherwise it will be marked that you did not respond lose a mark

$90$ min

$[4$:$08$ p$.$m$.,2024-03-27]$ Rachna Thapa: Solution

Calculate John Lackey's Division B Income, considering various sources such as employment, interest, and dividend income, along with stock transactions and a principal residence sale.

Given:

John's income details, stock transactions, and principal residence sale.

Objective:

Determine John Lackey's Division B Income and explain relevant calculations.

Explanation:

The solution calculates Division B Income by summing up various income sources, adjusting for stock transactions and principal residence sale, adhering to tax regulations.

$[4$:$09$ p$.$m$.,2024-03-27]$ Rachna Thapa: Step $2$

First, let's calculate the Division B Income:

$1.$ Employment Income: $$61,500\mathrm{.}00$

$2.$ Interest Income: $$2,600\mathrm{.}00$

$3.$ Taxable non$-$eligible Dividend Income: $$5,000\mathrm{.}00$

$4.$ Net Rental income: $$4,500\mathrm{.}00$

Total Income:

$$61,500\mathrm{.}00$ $$2,600\mathrm{.}00-$: $$5,000\mathrm{.}00+$ $$4,500\mathrm{.}00$

$-$ $$73,600\mathrm{.}00$

Now, let's calculate the Capital Loss and Capital Gain from the stock transactions:

For Bell Canada:

$[4$:$10$ p$.$m$.,2024-03-27]$ Rachna Thapa: $-$ Purchased $2000$ shares at $$200\mathrm{.}00$ each, total cost $=2,000$ x $$200\mathrm{.}00$

$=$ $$400,000\mathrm{.}00$

$-$ Sold $200$ shares at $$175\mathrm{.}00$ each, total revenue $=200\backslash$times $$175\mathrm{.}00$

$=$ $$35,000\mathrm{.}00$

$-$ Purchased $300$ shares at $$180\mathrm{.}00$ each, total cost $=300$ x $$180\mathrm{.}00$

$=$ $$54,000\mathrm{.}00$

Net Capital Gain$/$Loss for Bell Canada: $$35,000\mathrm{.}00-$ $$54,000\mathrm{.}00=-$$$19,000\mathrm{.}00$

For Enbridge Inc.:

$$ Purchased $1500$ shares at $$75\mathrm{.}00$ each, total cost

$=1500*$ $$75\mathrm{.}00$

$=$ $$112,500\mathrm{.}00$

$[4$:$11$ p$.$m$.,2024-03-27]$ Rachna Thapa: Sold $200$ shares at $$150\mathrm{.}00$ each, total revenue

$=200*$ $$150\mathrm{.}00$

$=530,000\mathrm{.}00$

$$ Purchased $250$ shares at $$145\mathrm{.}00$ each, total cost $=250*$ $$145\mathrm{.}00=$ $$36,250\mathrm{.}00$

Net Capital Gain$/$Loss for Enbridge Inc.:

$$30,000\mathrm{.}00-$ $$36,250\mathrm{.}00$

$=-$$$6,250\mathrm{.}00$

Total Capital Gain$/$Loss:

$(-$$$19,000\mathrm{.}00)+(-$$$6,250\mathrm{.}00)$

$=-$$$25,250\mathrm{.}00$

Since the total capital gain is negative, there's a capital loss.

$[4$:$12$ p$.$m$.,2024-03-27]$ Rachna Thapa: $(-$$$19,000\mathrm{.}00)+(-$$$6,250\mathrm{.}00)$

$=$$$25,250\mathrm{.}00$

Since the total capital gain is negative, there's a capital loss.

Now, let's calculate the Capital Gain$/$Loss from the Principal Residence:

$-$ Selling Price of Principal Residence: $$750,000\mathrm{.}00$

$-$ Purchase Price of Principal Residence: $$425,000\mathrm{.}00$

$$ Capital Gain from Principal Residence:

$$750,000\mathrm{.}00-$ $$425,000\mathrm{.}00$

$=$ $$325,000\mathrm{.}00$

$2$

Since the Principal Residence was sold, the capital gain is taxable.

Now, let's calculate the Division B Income:

$[4$:$12$ p$.$m$.,2024-03-27]$ Rachna Thapa: Total Income: $$73,600\mathrm{.}00$ Capital Gain from Principal Residence: $$325,000\mathrm{.}00$ Capital Loss from Stock

Transactions: $-$$$25,250\mathrm{.}00$

Division B Income:

$$73,600\mathrm{.}00$ $$325,000\mathrm{.}00-$ $$25,250\mathrm{.}00$

$=$ $$373,350\mathrm{.}00$

Now, let's check for any Capital Loss Carry Forward:

Since there's a capital loss this year,