Business Finance
SMU Effect on Carries Income for Effect on Carries Income for Tax Question

Southern Methodist University

Question Description

I’m stuck on a Business question and need an explanation.

1. Calculate the adjusted cost base at the time of the 2019 disposition of the following properties:  a. Sailboat; and b. Acoin Ltd. shares; and  

2. Determine the effect on Carrie’s income for tax purposes for 2019 resulting from the disposition of the above assets.   

Unformatted Attachment Preview

BUSI 3324 ASSIGNMENT A-4 PART 2 CHAPTER 8 DUE MARCH 26, 2020 11:55 AM A-4 Part 2 Assignment Chapter 8 1. Part 1 AP 7-2 and AP 7-6 due March 17 2. Assignment chapter 8 due March 26 Carrie is a Canadian resident with no immediate family. She plans to retire at the end of 2019. In preparation for her retirement she downsized by selling off the following assets during 2019 and moved into an apartment. ASSET Oil Painting Coin Collection Antique dining room set Living room furniture Sailboat Personal residence (city home) Cottage (country home) Vacant land 2,000 Shares in Acoin Ltd. (a Canadian public company) 800 Shares in Versatile Ltd. (a Canadian public company) Adjusted Proceeds of NOTE Cost Base disposition $800 $2,300 $10,100 $6,800 $900 $2,900 $12,000 $600 ?? $25,000 1 $330,000 $550,000 2 $80,000 $220,000 2 $14,000 $60,000 3 ?? $110,000 4 $45,000 $25,000 Notes: 1. During the years 2004 – 2014 Carrie owned a business taking passengers out for day sails in the Chester Basin. The unincorporated business had purchased the sailboat in 2004 for $50,000. In 2014 Carrie decided to discontinue the business and began to use the sailboat for personal purposes. The sailboat had a fair market value (FMV) of $22,000 and a UCC of $20,000 at the time of the change of use in 2014. Carrie refurbished the sailboat in 2018 and was therefore able to see it for $25,000 in 2019. 2. Carrie purchased her personal residence (city home) in 2009 for $330,000. Prior to 2009 she lived in an apartment. She purchased the cottage (country home) in 2016 for $80,000. Since purchasing the cottage Carrie has lived approximately 6 months at each of her homes. Carrie would like the principle residence reduction to be used to minimize her net income for tax purposes. 3. Carrie purchased the land many years ago with the intention of building a home once she retired. Now that she is retiring however she does not want to deal with the time and expense of maintaining a home and therefore sold it for $60,000. The terms of BUSI 3324 ASSIGNMENT A-4 PART 2 CHAPTER 8 DUE MARCH 26, 2020 11:55 AM the sale required a cash down payment of $6,000 to be received in 2019 followed by nine annual payments of $6,000 in each of 2020 - 2028. 4. Acoin shares were purchased and sold over a couple of years as follows: Date of # Shares purchase / sale Purchased / (sold) January 2018 May 2018 August 2018 March 2019 October 2019 600 400 (300) 1,300 (2,000) Cost / share $30 $40 Total Cost Total Proceeds $18,000 $16,000 $13,500 $50 $65,000 Required: 1. Calculate the adjusted cost base at the time of the 2019 disposition of the following properties: a. Sailboat; and b. Acoin Ltd. shares; and 2. Determine the effect on Carrie’s income for tax purposes for 2019 resulting from the disposition of the above assets. Selected check figures: Increase in Carrie’s net income for tax purposes = $27,650. REMEMBER TO SHOW ALL CALCULATIONS ...
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Final Answer

Hello again! I hope everything's fine in your end. Btw, thanks for waiting! Attached is a file that contains the answers for the given problems. Feel free to let me know if you have any questions or edits. Thanks!

Taxation
1. Calculate the adjusted cost base at the time of the 2019 disposition of the following properties:
a. Sailboat
b. Acoin Ltd. Shares
Answers:
a. sailboat
Timeline:
2004



$50,000 (business purposes)

2014



FMV: $22,000 (for ...

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