Question: In the current year, Tom sold a building which he owned personally to a corporation wholly owned by him and his wife. The corporation paid

In the current year, Tom sold a building which he owned personally to a corporation wholly owned by him and his wife. The corporation paid Tom $400,000 for the building. Tom purchased the building some years ago for $250,000. The UCC of the building at the beginning of the current year was $200,000. Tom does not deal at arm’s length with the corporation.
Determine the tax consequences for Tom and the corporation. Income tax reference: ITA 13(7)(e); Reg 1100(2.2).

Step by Step Solution

★★★★★

3.40 Rating (166 Votes )

There are 3 Steps involved in it

1 Expert Approved Answer
Step: 1 Unlock

Tom Tom has a taxable capital gain of 75000 12 x proceeds 400000 ACB 250000 and recapture of 50000 U... View full answer

blur-text-image
Question Has Been Solved by an Expert!

Get step-by-step solutions from verified subject matter experts

Step: 2 Unlock
Step: 3 Unlock

Document Format (1 attachment)

Word file Icon

691-L-B-L-I-T-E (685).docx

120 KBs Word File

Students Have Also Explored These Related Business Law Questions!

Q:

1. What is the deadline for making a contribution to a traditional IRA or a Roth IRA for 2014? a. April 15, 2015 b. April 15, 2014 c. December 31, 2014 d. October 15, 2015 2. Which of the following...

Q:

Tom and Donna were divorced three years ago. At the time of their divorce, they owned a residence whose value had significantly increased during the marriage. Tom remained half-owner of the house,...

Q:

Tom owns 100% of Hammer Corporation, an S corporation. Tom has a $100,000 stock basis on January 1. Tom actively participates in Hammers business. Hammer operating results were not good in the...

Q:

In the current year, Tom sold a building which he owned personally to a corporation wholly owned by him and his wife. The corporation paid Tom $400,000 for the building. Tom purchased the building...

Q:

Hey guys. So I have the following questions and these are the correct answers. I was hoping one of you could go through with the calculations to show me WHY those are the correct answers. Thank you B...

Q:

Hey guys. So I have the following questions and these are the correct answers. I was hoping one of you could go through with the calculations to show me WHY those are the correct answers. Thank you B...

Q:

ournal Entry Assignment (5% of Final Mark for course) Principles of Financial Accounting 0470-151 Winter 2016 Prof. Don Jones/Savoni/Shih Due date: February 3, 2016 Required: Windsor-Essex Tool is a...

Q:

ournal Entry Assignment (5% of Final Mark for course) Principles of Financial Accounting 0470-151 Winter 2016 Prof. Don Jones/Savoni/Shih Due date: February 3, 2016 Required: Windsor-Essex Tool is a...

Q:

1.Sandra Sherman incorporates her apartment building. It has a basis of $50,000, a value of$150,000, is subject to a mortgage of $70,000 and has a depreciation recapture potential of $12,000. If...

Q:

1.Sandra Sherman incorporates her apartment building. It has a basis of $50,000, a value of$150,000, is subject to a mortgage of $70,000 and has a depreciation recapture potential of $12,000. If...

Q:

Jason Timmons is struggling with some accounting concepts and has come to you for help. In particular he does not understand what is meant by a debit and a credit. He was especially confused when he...

Q:

The table below contains some incomplete information about the costs for a firm. Fill in the missing values and explain how you arrived at your answers. Output Total Cost Fixed Cost Variable Cost...

Q:

Using the NE Company Statement of Owner s Equity, what is the Net Income ( Loss ) entry? Choix de groupe de r ponses $ 1 2 , 9 6 9 $ 1 2 , 9 9 6 $ 1 2 , 6 9 6 $ 1 2 , 6 6 6

Q:

Suppose a foreign automaker builds a new plant in the US raising half of the funds through the sale of new stock inside US. Explain how the new plant affects the US capital account and exchange rate....

Q:

Red Corporation wants to set up a manufacturing facility in a mid western state. After considerable negotiations with a small town in Ohio, Red accepts the following offer: land (fair market value of...

Q:

Red Corporation wants to set up a manufacturing facility in a mid western state. After considerable negotiations with a small town in Ohio, Red accepts the following offer: land (fair market value of...

Q:

Red Corporation wants to set up a manufacturing facility in a mid western state. After considerable negotiations with a small town in Ohio, Red accepts the following offer: land (fair market value of...

Q:

You own $7,000. The dollar rate in Tokyo is 216.2463 Y/$. The Yen rate in New York is given in the following table: COUNTRY-CURRENCY CONTRACT $/FOREIGN CURRENCY Canadadollar Spot .8432 30-day .8415...

Q:

Please refer to the following passage for question 3. The following is an excerpt from Toifail et. al The Lancet 2018: Background: Poor nutrition and hygiene make children vulnerable to delays in...

Q:

Question 1 Blue Demon Bank expects that the Mexican peso will depreciate against the dollar from its spot rate of $0.15 to $0.14 in 10 days. The following interbank lending and borrowing rates exist:...