Reference no: EM132534912
Q.1 Ross contributed $100,000 to acquire a limited partnership interest in a new real estate development. The contribution entitled him to 20% of the partnership profits or losses. During the first year, the partnership lost $400,000. During the second year, the partnership lost $300,000. Ross never personally guaranteed any of the partnership debts. Which of the following statements is FALSE?
-The most that Ross can lose as a limited partner is $100,000.
-Ross can deduct $80,000 from his other sources of income in the first year.
-Ross can deduct $60,000 from his other sources of income in the second year.
-If Ross takes an active role in the business, he can lose more than $100,000 because he will lose his limited liability status
Q.2 Mason and John operate a computer consulting service as a general partnership. Their partnership agreement states that each partner's share of the profits will be prorated according to the number of billable hours each person achieves over the course of the year. For the year, Mason billed 1,500 hours; John billed 2,200 hours. The business realized a profit of $240,000. Over the course of the year, Mason and John both received bi-weekly cheques of $3,000. What was Mason's taxable income from the partnership?
-$78,000
-$97,297
-$120,000
-$175,297
Q.3 What statement about credit is FALSE?
-Credit for personal consumption can increase your net worth.
-Credit can result in significant interest charges.
-Credit can reduce the amount of money an individual has available to implement financial planning strategies.
-Credit can seduce an individual into buying things he or she does not need.
Q.4 Celia and Fiona opened a restaurant. Celia contributed 80% of the required capital; Fiona contributed the remaining 20%. They both work full-time managing the restaurant. Being best friends, Celia and Fiona did not bother to execute a partnership agreement. During the first year, the business realized a loss of $24,000. What statement is FALSE?
-Celia and Fiona can receive salaries from the business.
-Celia and Fiona have established a general partnership.
-Celia and Fiona are jointly and severally liable for the debts of the partnership.
-Fiona can deduct $12,000 from her other sources of income.
Q.5 Shawn is a travelling salesman who is approaching retirement. What amounts can Shawn deduct from his income?
1. fees Shawn paid to his financial planner to prepare a detailed retirement plan
2. capital cost allowance on the car Shawn uses for employment which his employer requires as a condition of Shawn's employment.
3. fees Shawn paid directly in respect of his self-directed RRSP
4. interest on the loan Shawn took out using his home as collateral; the loan proceeds were used to purchase shares in Shawn's employer's corporation
-1 and 4
-2 and 3
-2 and 4
-4 only
Q.6 Sheryl paid $12 in safety deposit box charges, $350 to her accountant for recording her investment income, $300 to her personal financial planner for preparing an education plan, $560 in investment counsel fees and $700 in brokerage fees. How much can she report as carrying charges on her income tax return?
-$572
-$622
-$922
-$1,922
Q.7 Earlier this year, Elise was offered a lucrative new job 1,000 km from her existing location so, she sold her house and moved closer to her new job. She paid $5,000 to the moving company, $2,000 in hotel and meal expenses and $3,000 in legal and real estate fees. Which of the following statements is FALSE?
-Elise can claim $10,000 in moving expenses as a tax deduction.
-Elise can claim her moving expenses as a tax deduction because she moved more than 40 km to be closer to her new job.
-Elise can only deduct her eligible moving expenses on her tax return for this year.
-Elise can deduct her moving expenses against income earned at the new location.
Q.8 Leanne owned a condominium unit which she used to generate rental income. She originally acquired the unit at cost of $160,000. Over the years, she had claimed $14,000 in CCA, such that her UCC at the beginning of the year was $146,000. This year, she sold the unit for $144,000. She incurred selling expenses of $5,000. What statement is true?
-Leanne has a terminal loss of $7,000.
-Leanne has a capital loss of $21,000.
-Leanne has a recapture of $14,000.
-Leanne has a terminal loss of $5,000.
Q.9 Compared to overall financial objectives, what response BEST describes an individual's money management objectives?
-narrowly focused
-directed towards minimizing life risks
-long range in nature
-easily achievable
Q 10 Chi owns a rental property. He provides all the basic services normally associated with rented rooms, such as basic utilities like water, heat and light. In addition, he provides his tenants with a parking spot and hot meals, for which he charges a monthly fee. Chi also includes a laundry pick-up and delivery service as part of the rental package. How would Canada Revenue Agency classify Chi's income from his rental operation?
-rental income
-income from employment
-business income
-professional income