Reference no: EM132548273
Q.1 Angie and Cole operate a successful accounting business as a general partnership. Their partnership agreement specifies that they would share equally in the profits and losses of the business. During the last fiscal year, Angie received regular bi-weekly cheques in the amount of $2,000, for a total of $52,000. At the end of the year, she received an additional cash distribution of $30,000. Over the course of the last fiscal year, the business realized a profit of $152,000. How much income does Angie have to report for tax purposes from the partnership?
a) $52,000
b) $76,000
c) $82,000
d) $158,000
2. Hank is over 85 years old and he is thinking about distributing some of his wealth now, instead of waiting until he dies. What scenario could result in the attribution of property income to Hank?
a) a gift to his brother, who is 68 years of age
b) a gift to his granddaughter, who is 16 years of age
c) a gift to his niece, who is 44 years of age
d) a gift to his daughter, who is 61 years of age
3. Jeff wants to retire from his successful general partnership by selling his partnership interest to an existing partner for net proceeds of $200,000. When Jeff first joined the partnership four years ago, he contributed $50,000. According to the partnership agreement, Jeff is entitled to 20% of the partnership profit. Over the course of the four years, he received weekly cheques of $2,000, for a total of $416,000. During that time, the business had a net profit of $2.2 million. What will Jeff's capital gain be as a result of the disposition?
a) $24000
b) $74,000
c) $126,000
d) $200,000
4. Kevin owns a country property that he purchased in 1967 for $30,000. The property was worth $25,000 at the end of 1971; he sold it this year for $155,000. Kevin does not use the principal residence exemption on this property. Using the tax-free zone method, what will be his taxable capital gain?
a) $62,500
b) $65,000
c) $83,333
d) $130,000
5. During the taxation year, Sherry earned $10,000 in wages and received $1,500 in tips from her part-time job as a waitress. From the RESP that her grandfather had established for her, she received $6,000 in investment income and $1,000 in capital. She withdrew $5,000 from her RRSP. She also received $3,000 in EI payments. What is Sherry's taxable income?
a) $15,000
b) $21,000
c) $22,500
d) $25,500
6. Joe, Arthur, Tony and Frank operate a general contracting company, called Four Guys and a Backhoe, as a general partnership. Joe and Arthur each contributed $40,000 to the start-up of the business and they both work in the business full-time. Tony and Frank each contributed $100,000, but they only work in the business on a part-time basis. They have never executed a partnership agreement. What statement is FALSE?
a) If Joe wants his brother, Max, to join the partnership, he must first get the consent of two of the three other partners.
b) If Tony dies, the partnership will automatically be dissolved.
c) Each partner has an equal say in the management decisions, despite their different capital contributions.
d) All four partners will be entitled to share in the profits equally, despite their different capital contributions and levels of participation.
7. Bill was born in Manitoba. He now has two homes and spends the summers (from May through September) in British Columbia and the rest of the year in Ontario. According to the Income Tax Act, Bill is a resident of what province?
a) Manitoba, British Columbia and Ontario
b) Manitoba
c) British Columbia
d) Ontario
8. Bohimil has a T4 slip that indicates a pension adjustment of $8,900. What statement is true?
a) Bohimil must include this amount in his taxable income.
b) Bohimil can deduct this amount from his taxable income.
c) Bohimil must report this amount on his tax return, but it will not affect his taxable income.
d) Bohimil can claim a non-refundable tax credit in the amount of the pension adjustment.