Reference no: EM132737522
Problem 1: Martin has a marginal tax rate of 46 percent. His wife, Carmen, has a marginal tax rate of 26 percent. In order to give his wife a supplemental source of income, he gave her a portion of his investment portfolio. Carmen's new investment portfolio generated interest income of $6,800 and taxable capital gains of $9,900. Which of the following statements is NOT correct?
Option 1: Martin faces an additional tax liability of $3,128 as a result of Carmen's interest income.
Option 2: Martin faces an additional tax liability of $4,554 as a result of Carmen's capital gains.
Option 3: Carmen has no additional tax liability as a result of the investment portfolio.
Option 4: Carmen faces a tax liability of $2,574 as a result of her capital gains.
Problem 2: Mr. Smith, the sole shareholder and employee of Smithco Ltd. since its incorporation in 1976, has decided to sell the corporation and retire in 2019. He has never belonged to a pension plan, and wishes to maximize his RRSP. Which one of the following amounts represents the largest retiring allowance from Smithco that Mr. Smith can transfer to his RRSP in the year he retires?
Option 1: $40,000.
Option 2: $56,000.
Option 3: $59,500.
Option 4: $70,000.
Problem 3: Oscar is 73 years old. His 2019 net income for tax purposes from his RRIF and other investments is $120,000. He lives with his common-law partner, Felix who is 63 years old. Felix's only income for 2019 was investment income of $6,000. Oscar can claim all of the following federal tax credits except:
Option 1: Basic personal tax credit.
Option 2: Age tax credit.
Option 3: Pension tax credit.
Option 4: Spousal tax credit.
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