Review the following scenarios and answer the accompanying questions. Show all calculations for full marks. 

Part A: On May 1, 2020, Ms. Ponti receives a $210,000 loan from her employer in order to assist her in purchasing a new home. The loan requires no payment of interest but must be repaid in annual instalments of $30,000 on December 31 in each of the years 2021 through 2027 Assume that the relevant prescribed rate is 4 percent during the first two quarters of 2020, but is reduced to 3 percent in the third quarter, and to 2 percent in the fourth quarter. What is the amount of Ms. Ponti's taxable benefit on this loan for the year?  

Part B: Mr. John Savage has been employed for many years by a Canadian controlled private corporation. Several years ago, Mr. Savage was granted options to acquire 4,000 shares of his employer's stock for $54 per share. At this time, the shares have a fair market value of $50 per share. On July 15, 2019, Mr. Savage exercises all of these options. At this time, the fair market value of the shares is $82 per share. 

In February 2020, he sells all of the shares for $97 per share. Calculate the effect of the transactions that took place during 2019 and 2020 on Mr. Savage's Net Income For Tax Purposes and Taxable income. Where relevant, identify these effects separately.

Answer rating: 100% (QA)

Answer Part A Figure is in Loan Amount 210000 Repaid in annual instalment of 30000 in next 7 years ... View the full answer