Heather Worth has self-directed registered and non-registered investment accounts. During 2020, Heather completed the transactions listed...

 

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Heather Worth has self-directed registered and non-registered investment accounts. During 2020, Heather completed the transactions listed below (all companies listed are Canadian public companies). Heather reported taxable capital gains of $1,500 in 2015, $400 in 2017, $500 in 2018, and $5,000 in 2019. Heather had NO other source of capital gains/losses in the 2020 tax year other than the investment accounts listed below. Heather has been in the top federal tax bracket for the last 10 years. Non-registered: • Purchase of 100 shares of Arcade Co. for $3,000 settled on January 15, 2020 • Sale of 100 shares of Arcade Co. for $500 to utilize losses settled on December 29, 2020 • Purchase of 100 shares of Arcade Co. for $550 settled on December 30, 2020 • Purchase of Xylo Co. for $4,950 settled on February 15, 2020 • Sale of Xylo Co. for $3,250 settled on November 1, 2020 • Sale of Deer Co. for $1,000 settled on March 15, 2020 (Heather purchased Deer Co. in 2018 for $500) Registered Retirement Savings Plan (RRSP): • Sale of Tuft Co. shares for $5,000 settled on September 14, 2020 (Heather purchased Tuft Co. shares in 2017 for $2,600; this trade was the only activity in Heather's registered accounts during the last five years) Required: a) Calculate Heather's net taxable capital gain or allowable capital loss in 2020. (3 marks) b) State the impact on Heather's taxable income in 2020. (0.5 marks) c) Explain the types of income from which allowable capital losses can be deducted. (0.5 marks) d) If a taxpayer has allowable capital losses that they are unable to use in a year, discuss what can be done to utilize the allowable capital losses. (1 mark) e) Explain to Heather what she should do with any allowable capital losses realized in 2020. (1 mark) Heather Worth has self-directed registered and non-registered investment accounts. During 2020, Heather completed the transactions listed below (all companies listed are Canadian public companies). Heather reported taxable capital gains of $1,500 in 2015, $400 in 2017, $500 in 2018, and $5,000 in 2019. Heather had NO other source of capital gains/losses in the 2020 tax year other than the investment accounts listed below. Heather has been in the top federal tax bracket for the last 10 years. Non-registered: • Purchase of 100 shares of Arcade Co. for $3,000 settled on January 15, 2020 • Sale of 100 shares of Arcade Co. for $500 to utilize losses settled on December 29, 2020 • Purchase of 100 shares of Arcade Co. for $550 settled on December 30, 2020 • Purchase of Xylo Co. for $4,950 settled on February 15, 2020 • Sale of Xylo Co. for $3,250 settled on November 1, 2020 • Sale of Deer Co. for $1,000 settled on March 15, 2020 (Heather purchased Deer Co. in 2018 for $500) Registered Retirement Savings Plan (RRSP): • Sale of Tuft Co. shares for $5,000 settled on September 14, 2020 (Heather purchased Tuft Co. shares in 2017 for $2,600; this trade was the only activity in Heather's registered accounts during the last five years) Required: a) Calculate Heather's net taxable capital gain or allowable capital loss in 2020. (3 marks) b) State the impact on Heather's taxable income in 2020. (0.5 marks) c) Explain the types of income from which allowable capital losses can be deducted. (0.5 marks) d) If a taxpayer has allowable capital losses that they are unable to use in a year, discuss what can be done to utilize the allowable capital losses. (1 mark) e) Explain to Heather what she should do with any allowable capital losses realized in 2020. (1 mark)

Answer rating: 100% (QA)

a 100 shares of Arcade Co at 3000 100 shares of Arcade Co at 500 2500 ... View the full answer