10

xlsx

School

Fanshawe College *

*We aren’t endorsed by this school

Course

3043

Subject

Finance

Date

Jan 9, 2024

Type

xlsx

Pages

Uploaded by MegaOstrichMaster680

CH 17 AP 2 - Basic s.85 Rollover from Proprietorship to Corporation CH 17 AP 3 - Transfer of Assets & Liabilities between Corporations using s.85 CH 17 AP 4 - Transfer of Assets using s.85 and Tax consequences of Sale or Redemption CH 17 AP 6 - Transfer using s.85 CH 18 AP 4 - Capital Reorganization using s.86 with Benefit Conferred CH 19 AP 1 - Partnership Income, Tax Payable by partner, tracking ACB & CG on disposition of partners CH 19 AP 3 - Partnership Income, Taxable Income of Partner and CG on disposition (tracking ACB) CH 19 AP 4 - Partnership Income Partner Tax Liability and Impact of Negative ACB CH 19 AP 5 - Various Types of Trusts and Tax Consequences CH 19 AP 6 Inter-vivos Trusts and tax consequences CH 19 AP 10 Calculation and Comparison of Tax for an Estate Chapter 17 – Tax Deferred Transactions: Section 85 Rollover on a Transfer to a Corporation 17-2 17-3 17-4 17-6 Chapter 18 – Tax Deferred Transactions: Section 51, 86, 85.1 Amalgamations, Wind-Ups, and Estate Freeze CH 18 AP 3 - Reorganization using s.86 18-3 18-4 Chapter 19 – Partnerships, Trusts, and Death of a Taxpayer

Fo 84.1-84.2 NAL sale of shares 85 Transfer of property to a corporation 2022 FED Taxable Income $50,197 or less In excess of $50,197 In excess of $100,392 ship interest In excess of $155,625 In excess of $221,708 2022 PROV Taxable Income $50,197 or less In excess of $50,197 In excess of $100,392 In excess of $155,625 In excess of $221,709 e Transactions 19-1 19-3 19-4 19-5 19-6 19-10

or Chapter 19 Tax Rate DERAL TAX RATES: Tax 15% $7,530 + 20.5% on next $50,195 $17,820 + 26% on next $55,233 $32,181 + 29% on next $66,083 $51,345 + 33% on remainder VINCIAL TAX RATES: Tax 10% $5,020 + 12% on next $50,195 $11,043 + 15% on next $55,233 $19,328 + 17% on next $66,083 $30,562 + 17% on remainder

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

CH 19 AP 6 Inter-vivos Trusts and tax co Jane 2021 (Jane is 17) Trust Intervivos Mr. B attribution 40% Dividends 40,000 16,000 Interest Income (note 1) 12,500 5,000 52,500 5,000 16,000 Paid/Payable to Beneficiary - 21,000 31,500 Dividend Gross up (15%) 3,600 2,400 Taxable Income 35,100 5,000 18,400 Tax Rates (note 2) 50% 50% 50% Federal Tax before credits 17,550 9,200 Personal Tax Credit (note 3) - - Dividend Tax Credit - 3,600 - 2,400 Total Federal Tax Payable 13,950 6,800 Jane 2022 (Jane is 18) Trust Intervivos 40% Dividends 40,000 16,000 Interest Income 12,500 5,000 52,500 21,000 Paid/Payable to Beneficiary - 21,000 31,500 Dividend Gross up (15%) 3,600 2,400 Taxable Income 35,100 23,400 Tax Rates 50% 25% 17,550 1,250 tax on interest at 25% 9,200 tax on taxable dividend at 50% Personal Tax Credits - 1,250 BPA only on income not subject t Dividend Tax Credit - 3,600 - 2,400 Federal Tax Payable 13,950 6,800 20,750

onsequences Notes; 1. in 2021 the interest on the bond will be attributed to Mr, B as Jane is only 17 and he has transfered property In 2022 Jane turns 18 and the attribution ceases. 2. The inter-vivous trust pays tax at the top rate (50%), Jane will also pay tax at 50% on the dividend because o 3. The trust does not get personal tax credits ince it is not a Graduated Rate Estate (GRE).Jane is elipible for the Mr.B does not get the credit on income attributed to him. to TOSI Main

y by means ofthe trust for her benefit of TOS e personal tax credit except in 2021 because of TOSI applying to the divicdend

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

CH 19 AP 10 Calculation and Compa Part A & D 1. Assess the situation Mr. Ricky Cdn resident QSPC shares Assets: 100 c/s Income: RRSP $795K Shining CCPC/SBC ACB = PUC= $55,000 FMV $5,750,000 2. Identifv the relationships among the stakeholders Mr. R and Mrs. R, their daughter and Shining Ltd are all related 3. Identifv the profile of each stakeholder Mr. Ricky - died March 1, 2022 1. resident in Canada 2. has not used his LCGE 3. all assets are left to his spouse except the rental properties 4. RRSP - FMV $795,000 5. Had not made an RRSP contribution for 2022 at the time of his death Mrs. Ricky - spouse 1. resident in canada 2. All assets go to ths spouse (except rentals) 3. Shares of Shining Ltd are QSBC shares - ACB & PUC of S55K, FMV 5,750,000 Daughter - only child, resident in Canada, inheriting rental properties 4. Fully understand the decision maker and their objectives Decision maker - Mrs. Ricky as the Executrix 1. Filing final tax returns for the deceased (and any o/s returns) 2. Minimize tax payable 3. Identify any planning opportunities 5. Identify relevant past transactions/events Date of Death: Mar 1, 2022 Identify all of the major tax issues and non-tax issues ISSUE 1:

1. Advise Executor of the estate on filing requirements Tax returns to be filed, filing due dates, payment due dates discuss obligations of executor of the estate 2. Determine income, taxable capital gains to be included on each of the returns to be filed for Mr. Ricky a discuss dispositions on death discuss tax treatment of RRSP on death discuss potential utilization of the LCGE at time of death discuss planning opportunities and tax treatment of the estate Quantitative calculate tax liability on terminal returns calculate cost amounts for properties inherited by the beneficiaries 7. Analyze the major issues ldentify the filing requirements ISSUE 1: Filling Requirements: i) 2021 Personal Tax return Mrs. R has to file the 2021 return by the later of six months from date of death ie. Sept 2022 and the norma ii) Terminal (Final) Return Mrs. R needs to file the terminal return which will be from Jan 1, 2022- Mar 1, 2022, must b2 filed by April 3 iii) Estate return - can designate as a GRE testatmentary trust was created via the will All of the capital properties owned death that must be distrbuted to the beneficiares will flow to into the Es She can select any year end re: GRE - it can run for 36 months and take advantage of graduated tax rates PLANMING PONT - f the daughter is in a hih tax bracket t may be advantageous to claim rental income in iv. Rights or Things Return Mr. R has the opportunity to file this elective return as there was a bonus declared but not paid at the time OBLIGATIONS of Executor Ensure all returns are filed (teminal return and RT and taxes are paic. equest a dearance certicate trom CRA Part C & D ISSUE 2: Final/Terminal Return - Calculation of income on final return Generaly, all income earned on a periodic basis must be accrued on a daily basis and included as income in Mr. Rickys capital property is deemed to be disposed of at the fair market value at the time of death, excep in which case, a taxfree rollover at adiusted capital cost is available. Mrs. Ricky can make a final RRSP contribution for 2022 to report on his final return

The salary of 12,000 per month will be reported on the final return (Jan-feb) Rental income is also taxable in the year it accrues. The bond and savings account interest to be reported o Bonus declared but not paid will go on the R&T return Any assets left to the spouse will roll at ACB Shares of Shining Ltd. The shares have been left to the spouse therefore a tax-free rollover is available To improve this scenario we can elect out of the spousal rollover We need to determine how many shares will be disposed at FMV and the rest can roll to the spouse at ACB The lCGE limit for 2022 is S913,630 so we would want to create a Capital Gain close to this amount to utilize Rental Property There is no tax-free rollover as the properties are going to the daughter Properties will be disposed of at FMV on his final return, the daughters ACB on the properties wil be that sa RRSP Mrs. Ricky is the beneficiary of the RRSP so that can roll to her and she would then contribute to the value T4RSP slip showing $795,000 RRSP contribution slip $795,000 Non-refundable Tax Credits The final return and the R&T return can access the personal tax credits GRE will not have personal tax credits Shares Deemed disposition on death or rollover to surviving spouse If the shares are rolled to the spouse this would be the tax consequence: POD 55,000 ACB - 55,000 CG - TCG - OR, Elect at a higher value to use his LCGE #of shares 100 FMV 5,750,000 ACB - 55,000 CG 5,695,000 CG per share 56,950

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

LCGE 913,630 # of share to use 16.04 Election Options Elected 16 17 Automatic Rollover 84 83 POD 920,000 977,500 ACB - 8,800 - 9,350 CG 911,200 968,150 TCG 455,600 #NAME? LCGE 456,815 456,815 TCG subject to tax - #NAME? LCGE Lost 2,430 - ACB to Mrs. Ricky 920,000 Rollover shares 46,200 ACB of all shares 966,200 Rental Property Mr. R's final return will include the following: Unit 1 Unit 2 Land Building Land Building Capital Gain/Loss: 600,000 1,100,000 620,000 380,000 POD - 300,000 - 472,000 - 310,000 - 383,000 300,000 628,000 310,000 Recapture/Terminal Losses: UCC 350,000 352,000 LOCP - 472,000 - 380,000 Recapture - 122,000 - 28,000 Calculation of Income On Final Returns ALL income on one final return Final return Salary - 2months at 12K 24,000 24,000 Bonus payable 50,000 Interest accrued 917 917 Rental property income - 2 months at 5K 10,000 10,000 Recapture on rentals 150,000 150,000 TCG on rentals 619,000 619,000 TCG on 16 shares of Shining Ltd. 455,600 455,600 Enhanced Cpp deduction - 461 - 461

RRSP Contribution for 2022 - 22,500 - 22,500 LCGE on the 16 shares of shining ltd - 456,815 - 456,815 829,741 779,741 Tax (Fed & Prov) 385,924 360,924 NRTC BPA (reduced) 12,719 - 3,180 - 3,180 CPP (given) 3,039 - 760 - 760 Employment Credit 1,287 - 322 - 322 Total Tax Payable 381,662 356,662 Tax if filed all on one Final return 381,662 Tax if we elect to file 2 returns 365,563 Tax Savings 16,100

arison of Tax for an Estate Executrix - Mrs. Ricky Beneficiaries: Mrs. Ricky - all other assets - Cdn resident Daughter - rental properties Main

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version

Access to all documents
Unlimited textbook solutions
24/7 expert homework help

and the estate al filing deadline Apr 2022 30, 2023 state.Mts.Ricky as the excutrix of the will, will be required to distrbut the properties in accordance with h the trust for 36 months then distribute properties to her daughter e of his death (declared feb 15, 2022) A, 0nce the ciearance certicate s rereved al properties an oe distmouteo n Mr, Rickys terminal return [par. 70(1)a)]. pt when such property is left to the spouse [ssec. 70(1)(5)], 22,500 (earned income 125,000 in 2021)

on the final return B e his limit on the final return ame FMV used in his return to her own RRSP

Total POD(FMV) becomes his daughters ACB 1,238,000 619,000 TCG - 150,000 R&T Return Stuff can go on here *bonus declared not paid 50,000 *dividends declared not piad *OAS & CPP payment in the month of death *items receivable but not paid on death *agriculture, crops, work in progress

Your preview ends here

Eager to read complete document? Join bartleby learn and gain access to the full version