Required: For the tax scenario that you are assigned, write a short memo explaining the tax policy to a client. Keep in mind that the client will have limited understanding of income taxation, so you need to analyze the issue at a high level and then draw a conclusion. Explain the impact that your conclusion will have on the tax position or taxes payable (now or in the future.

2) Scenario Bill, a chef at a golf course just outside the City of Orillia, purchased a waterfront property on Lake Couchiching in January 2018 for $300,000. The property consisted of an old cottage which had not been maintained or inhabited for years. The waterfront property was 100 ft wide and relied upon the lake for water supply. This limited the amount of time that the property could be used because water supply ceased in the winter months. The property was on a rural road just outside of town. IN the time that he has owned this property, Bill has cleared the land, improved the waterfront and has hired contractors to do repairs on the front of the cottage. He has also applied for a building permit to add a Bunkie so that his adult children can enjoy the property too. Since he owns a townhouse with a small yard in the city of Orillia, he felt this would be a good way to enjoy the spring to fall seasons when he is busy at work. Also, he usually goes to Florida for a couple of months in the winter when the golf course closes. In September 2019, the city of Orillia announced that they are expanding the city water supply outside the city limits. This expansion means that the city will provide their water supply to these neighbourhoods since they are growing. This will mean that Bills property will be accessible all year round and will increase in value. It is now November 2019 and Bill has just accepted the offer to sell his property for $650,000. Bill asks you to advise him on the tax treatment for this transaction