Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Your client and their spouse are retiring in 2020. They are selling the family home and cottage and are moving into a new home. Details

Your client and their spouse are retiring in 2020. They are selling the family home and cottage and are moving into a new home. Details of the home and cottage sales are as follows:

Year Purchased

Proceeds of Sale

ACB

Family home

2005

$800,000

$380,000

Cottage

1994

$550,000

$50,000

Real estate and legal fees on the sales amounted to $42,000 on the family home and $25,000 on the cottage, respectively

Required:

  • Discuss how we would evaluate whether the gain on sale should be considered on account of income or as a capital gain. i.e. what are the key factors
  • If the gain is considered a capital gain, what is needed for the properties to qualify for the principal residence exemption.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Economics Of Accounting Information In Markets

Authors: Peter Ove Christensen, Gerald Feltham

2nd Edition

1402072295, 9781402072291

More Books

Students also viewed these Accounting questions

Question

Use z = a + bi and w = c + di to show that Z. W = Z.W.

Answered: 1 week ago

Question

How often do you meet with your graduate students?

Answered: 1 week ago

Question

Th ey told me Id have to write a lett er. Whos got time for that?

Answered: 1 week ago