Use Excel to complete both problems and submit them in the Assignments folder in the Assignments section of this course This assignment is due by the end of this module 1 Assignment Problem Eight 7 (Principal Residence Designation) Mr Stewart Simms has lived most of his life in Vancouver In 1996, he purchased a three bedroom home near English Bay for $125,000 In 2001, he acquired a cottage in the Whistler ski area at a cost of $40,000 In all subsequent years, he has spent at least a portion of the year living in each of the two locations When he is not residing in these properties, they are left vacant On October 1, 2020, Mr Simms sells the English Bay property for $515,000 and the cottage at Whistler for $320,000 Mr Simms wishes to minimize any capital gains resulting from the sale of the two properties Required Describe how the residences should be designated in order to accomplish Mr Simms goal In addition, calculate the amount of the taxable capital gain that would arise under the designation that you have recommended 2 Assignment Problem Eight 8 (Personal Use Property) Mr Firenza owns a number of personal assets, all of which were acquired while he was a resident of Canada As he plans to spend the next five years travelling the globe, he will be converting most of his possessions to cash The assets he will be selling in the current year can be described as follows He owns a vintage automobile that has been restored to like new condition He acquired the vehicle for $42,000 and has spent $135,000 on the restoration process He estimates the current fair market value of the automobile to be $320,000 He has an extensive coin collection, which has a current fair market value of $23,500 The total cost of all of the coins is $17,600 He believes that the coins can be disposed of without incurring any selling costs At her death, his mother left him a rare 17 th century manuscript His mother had paid $4,000 for the manuscript and, at the time of her death, it was estimated that its fair market value was $42,000 However, since the time of the bequest, several other copies of manuscript have been found and, as a consequence, its value has decreased to $8,500 Mr Firenza owns a Lawren Harris oil painting that he acquired for $275,000 While he believes it could be sold for $350,000, the auction house will charge a commission of 20 percent of the sales price Mr Firenza owns a sailboat that cost $162,000 He estimates that its current fair market value, net of selling costs, would be $123,000 Mr Firenza has an antique desk that he acquired for $600 He believes that it could be sold for $2,200 and that no selling costs would be incurred Required Mr Firenza has asked you to determine the amount that would have to be included in his Net Income For Tax Purposes if all of these assets were sold for their estimated values Indicate any amounts that may be available for carry over to other years

The Answer is in the image, click to view ...

Answered step by step

Verified Expert Solution

Link Copied!

Question

1 Approved Answer

Posted on Sep 30, 2024

Use Excel to complete both problems and submit them in the Assignments folder in the Assignments section of this course. This assignment is due by

Use Excel to complete both problems and submit them in the Assignments folder in the Assignments section of this course. This assignment is due by the end of this module.

1. Assignment Problem Eight 7: (Principal Residence Designation)

Mr. Stewart Simms has lived most of his life in Vancouver. In 1996, he purchased a three bedroom home near English Bay for $125,000. In 2001, he acquired a cottage in the Whistler ski area at a cost of $40,000. In all subsequent years, he has spent at least a portion of the year living in each of the two locations. When he is not residing in these properties, they are left vacant.

On October 1, 2020, Mr. Simms sells the English Bay property for $515,000 and the cottage at Whistler for $320,000.

Mr. Simms wishes to minimize any capital gains resulting from the sale of the two properties.

Required: Describe how the residences should be designated in order to accomplish Mr. Simms goal. In addition, calculate the amount of the taxable capital gain that would arise under the designation that you have recommended.

2. Assignment Problem Eight 8: (Personal Use Property)

Mr. Firenza owns a number of personal assets, all of which were acquired while he was a resident of Canada. As he plans to spend the next five years travelling the globe, he will be converting most of his possessions to cash. The assets he will be selling in the current year can be described as follows:

He owns a vintage automobile that has been restored to like-new condition. He acquired the vehicle for $42,000 and has spent $135,000 on the restoration process. He estimates the current fair market value of the automobile to be $320,000.

He has an extensive coin collection, which has a current fair market value of $23,500. The total cost of all of the coins is $17,600. He believes that the coins can be disposed of without incurring any selling costs.

At her death, his mother left him a rare 17^th century manuscript. His mother had paid $4,000 for the manuscript and, at the time of her death, it was estimated that its fair market value was $42,000. However, since the time of the bequest, several other copies of manuscript have been found and, as a consequence, its value has decreased to $8,500.

Mr. Firenza owns a Lawren Harris oil painting that he acquired for $275,000. While he believes it could be sold for $350,000, the auction house will charge a commission of 20 percent of the sales price.

Mr. Firenza owns a sailboat that cost $162,000. He estimates that its current fair market value, net of selling costs, would be $123,000.

Mr. Firenza has an antique desk that he acquired for $600. He believes that it could be sold for $2,200 and that no selling costs would be incurred.

Required: Mr. Firenza has asked you to determine the amount that would have to be included in his Net Income For Tax Purposes if all of these assets were sold for their estimated values. Indicate any amounts that may be available for carry over to other years?