For each of the following trusts settled by Mrs. A explain: The tax consequences of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
For each of the following trusts settled by Mrs. A explain: • The tax consequences of the transfer of property by Mrs. A to the trust; • The rate of tax payable by the trust; • The tax consequences of the transfer of property from the trust to the beneficiary a. On June 1, 2020, Mrs. A settled a painting on her daughters, B and C, in trust for her grandchildren. The painting has a cost to Mrs. A of $500 and a fair market value of $7,000. b. Mrs. A provides in her will that her shares of ABC Co. are to be held in trust for her grandchildren. These shares have a cost to Mrs. A of $10,000 and a fair market value of $35,000. Part B Mr. B died on March 15, 2020. Mr. B's will provides that the residue of his estate is to be transferred to a trust for the benefit of his wife, Mrs. B, a resident of Canada. The will provides that the income of the trust is to be paid to Mrs. B. The will also allows the executors to pay out capital for the benefit of Mrs. B. On Mrs. B's death, the trusť's assets are to be distributed to the Bs' children. Mr. B's assets include shares of XYZ Inc., a public company, which were purchased about 25 years ago for $1,000 and have a fair market value at his death of $100,000. (A) Explain the tax consequences to Mr. B arising out of the transfer of the ABC Inc. shares to the trust for Mrs. B. (B) Explain the tax consequences to the trust of holding the shares and earning dividend income. (C) Explain the tax consequences if the shares are transferred to Mrs. B. (D) Explain the tax consequences if the shares are still held by the trust at the time Mrs. B dies. (E) Explain how your answer to (A) would be different if Mr. B's will provided the trustees with the power to encroach on capital for the benefit of the Bs' children. Part C Ms. C, a lawyer, died on June 1, 2020. Ms. C was divorced at the time of her death. Under the terms of her will, her estate is to be distributed equally to her 2 adult children. At the time of death, Ms. C owned investments in publicly traded securities, RRSPS, a house and cottage, artwork and personal properties as well as an interest in her professional partnership. The executor of her estate is her longtime partner Ms J. You have agreed to advise the executor as follows: (A) Explain the tax consequences to Ms. C at the time of her death related to the properties she owned at that time. (B) Explain the tax treatment of the estate arising on Ms. C's death. (C) Explain the tax consequences of the distribution of properties from Ms. C's estate to her children. For each of the following trusts settled by Mrs. A explain: • The tax consequences of the transfer of property by Mrs. A to the trust; • The rate of tax payable by the trust; • The tax consequences of the transfer of property from the trust to the beneficiary a. On June 1, 2020, Mrs. A settled a painting on her daughters, B and C, in trust for her grandchildren. The painting has a cost to Mrs. A of $500 and a fair market value of $7,000. b. Mrs. A provides in her will that her shares of ABC Co. are to be held in trust for her grandchildren. These shares have a cost to Mrs. A of $10,000 and a fair market value of $35,000. Part B Mr. B died on March 15, 2020. Mr. B's will provides that the residue of his estate is to be transferred to a trust for the benefit of his wife, Mrs. B, a resident of Canada. The will provides that the income of the trust is to be paid to Mrs. B. The will also allows the executors to pay out capital for the benefit of Mrs. B. On Mrs. B's death, the trusť's assets are to be distributed to the Bs' children. Mr. B's assets include shares of XYZ Inc., a public company, which were purchased about 25 years ago for $1,000 and have a fair market value at his death of $100,000. (A) Explain the tax consequences to Mr. B arising out of the transfer of the ABC Inc. shares to the trust for Mrs. B. (B) Explain the tax consequences to the trust of holding the shares and earning dividend income. (C) Explain the tax consequences if the shares are transferred to Mrs. B. (D) Explain the tax consequences if the shares are still held by the trust at the time Mrs. B dies. (E) Explain how your answer to (A) would be different if Mr. B's will provided the trustees with the power to encroach on capital for the benefit of the Bs' children. Part C Ms. C, a lawyer, died on June 1, 2020. Ms. C was divorced at the time of her death. Under the terms of her will, her estate is to be distributed equally to her 2 adult children. At the time of death, Ms. C owned investments in publicly traded securities, RRSPS, a house and cottage, artwork and personal properties as well as an interest in her professional partnership. The executor of her estate is her longtime partner Ms J. You have agreed to advise the executor as follows: (A) Explain the tax consequences to Ms. C at the time of her death related to the properties she owned at that time. (B) Explain the tax treatment of the estate arising on Ms. C's death. (C) Explain the tax consequences of the distribution of properties from Ms. C's estate to her children.
Expert Answer:
Answer rating: 100% (QA)
According to the CRA the tax ACT regards the body of the trustee as a separate taxable body The Canadian federal income tax is a system of administration undertaken by the Canadian Revenue Agency were ... View the full answer
Related Book For
Chemistry The Central Science
ISBN: 978-0321696724
12th edition
Authors: Theodore Brown, Eugene LeMay, Bruce Bursten, Catherine Murphy, Patrick Woodward
Posted Date:
Students also viewed these accounting questions
-
Which of the following is an example of capital expenditure? A Purchased a pencil sharpener at a cost of Rs.2 B C D Installing an escalator at cost of Rs.5,600 in a three storey building which had...
-
For each of the following payroll-related taxes, indicate whether they generally apply to (a) Employees only, (b) Employers only, or (c) Both employees and employers: 1. Federal income tax 2....
-
For each of the following payroll-related taxes, indicate whether it generally applies to (1) Employees only, (2) Employers only, or (3) Both employees and employers: a. Federal income tax b. Federal...
-
Find the smallest positive angle and the smallest negative angle (numerically) coterminal with but not equal to the given angle. 47.0
-
Refer to Exercise 5.24. Suppose a random sample of 100 students is selected yielding y-bar = 542 and s = 76. Is there sufficient evidence to conclude that the mean mathematics achievement level has...
-
The rigid beam is supported by three A-36 steel wires, each having a length of 4 ft. The cross-sectional area of AB and EF is 0.015 in 2 , and the cross-sectional area of CD is 0.006 in 2 . Determine...
-
The hot dog cooker described in the chapter heats hot dogs by connecting them to \(120 \mathrm{~V}\) household electricity. A typical hot dog has a mass of \(60 \mathrm{~g}\) and a resistance of...
-
Robert Parker, president of the Wilkerson Company, was discussing operating results in the latest month with Peggy Knight, his controller, and John Scott, his manufacturing manager. The meeting among...
-
A rocket fires vertically into the air with an upward thrust with a magnitude that is twice that of the force of gravity, during the first two seconds of flight. After the first two seconds the...
-
a. Would you consider the presentation to be a multiple-step income statement or a single-step income statement? Comment. b. Does it appear that there is a 100% ownership in all consolidated...
-
The table below shows the Net Requirements for Party-Z. The lot sizing rule is the Silver-Meal Heuristic. We know that the planned receipts for period 1 will include the net requirements for periods...
-
Steven had a taxable estate of $8,850,000 when he died in 2017. If he had no prior taxable gifts, what is his net estate tax liability?
-
An estate has $20,000 of taxable income in 2017. What amount of tax will the estate pay if it fails to distribute the income to the beneficiaries?
-
John is a teacher at a local high school. During 2017, he travels three days per week to a school in the next county to work with gifted children in an after-school program that does not end until...
-
Lynn, age 66, is an unmarried individual who has a dependent grandchild who lives with her. What is Lynns standard deduction for 2017?
-
Using the Internet, find at least five articles that relate to the marketing of NASCAR.
-
Obtain the output of the following (linear) steam turbine control system where R(s) input and Ta(s) are both unit step functions. R(S) Speed reference Filter 10 s + 10 Tuning fork and error detector...
-
Complete the equations for the following equilibria and calculate Keq where the Keq expression includes [HO]. Be sure to enter Keq in proper scientific notation. (a) ammonia (acting as a base) reacts...
-
Calculate (a) The number of grams of solute in 0.250 L of 0.175 M KBr
-
Phenylacetic acid (C6H5CH2COOH) is one of the substances that accumulates in the blood of people with phenylketonuria, an inherited disorder that can cause mental retardation or even death. A 0.085 M...
-
Write the chemical formula for each of the following, and indicate the oxidation state of the halogen or noble-gas atom in each: (a) Calcium hypobromite (b) Bromic acid (c) Xenon trioxide (d)...
-
In recent years, Keflavik Paper Company has been having problems with its project management process. Several commercial projects, for example, have come in late and well over budget, and product...
-
Your firm has the opportunity to invest $75,000 in a new project opportunity but due to cash flow concerns, your boss wants to know when you can pay back the original investment. Using the discounted...
-
Pracht, a popular cosmetics company in Germany, has been performing favorably and growing at a constant rate, with profits exceeding $900,000 in the last financial year. The company now wants to...
Study smarter with the SolutionInn App