Reference no: EM133054406
QUESTION ONE - Determine the amount of interest to be included in income in Years 1, 2, and 3 for each of the following situation. Income tax reference: ITA 12(1)(c), 12(3), (4), (11).
Debra purchased a $10,000 bond on its issue date, November 1, Year 1. The bond pays interest at 6%, compounded annually. Debra will receive the interest when the bond matures on October 31, Year 3.
QUESTION TWO - Anne received the following dividend income during the current year:
$1,000 of eligible dividends from taxable Canadian corporations
$1,000 of non-eligible dividends from taxable Canadian corporations
$1,000 of foreign dividends. The foreign country withheld $150 in foreign tax and Anne received the net amount of $850.
Determine the amount of dividend income to be included in Anne's property income for the current year. Income tax reference: ITA 12(1)(j), (k), 82(1).
QUESTION THREE - At the end of the current year, Fred owned two residential rental properties. Rental property #1 cost $125,000 (land $50,000; building $75,000) and at the close of last year had a UCC of $64,000. Rental property #2 was acquired in the current year for $210,000 (land $80,000; building $130,000). Revenue and expenses for the rental properties during the year were as follows:
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|
Property #1
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Property #2
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Total
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Revenue
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$13,200
|
$4,500
|
$17,700
|
|
Expenses:
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|
|
|
|
Mortgage interest
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(0)
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(3,000)
|
(3,000)
|
|
Repairs & maintenance
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(5,000)
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(0)
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(5,000)
|
|
Property tax
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(3,100)
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(1,000)
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(4,100)
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|
Insurance
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(500)
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(200)
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(700)
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|
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(8,600)
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(4,200)
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(12,800)
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Income
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$4,600
|
$300
|
$4,900
|
Determine the maximum CCA deduction for the rental properties for the current year. Income tax reference: Reg. 1100(11), 1101(1ac).