During 2020, you are employed at Ace Corporation. Your salary is $45,000, you contributed $3,000 to your employer’s Registered Pension Plan, paid union dues of $1,000, and received a basket of food and alcohol worth $675 as a holiday gift. You own three residential rental properties. Information on these properties is as follows:

                                            500                       300                   700

                                         Liberty                  Path             Avenue

CCA Class                             1                             1                      1

Capital Cost of Building   $456,000        $246,000        947,000

January 1, 2020 UCC        $411,845         $213,018                   0

Rental receipts and expenses, excluding capital cost allowance (CCA) for 2020 are:

                                           500               300               700

                                       Liberty            Path           Avenue

Rental Receipts              $37,200       $12,800        $63,600

Property Taxes               ( 6,840)         ( 9,690)        (14,205)

Interest Charges          ( 10,200)         ( 4,200)        (41,300)

Other Expenses              ( 8,400)         ( 1,100)        (3,600)

Net Rental Income (Loss)

Before CCA                     $11,760        ($ 2,190)        $4,495

Other Information:

You sold both Liberty and Path buildings during 2020:

1. You sold the 500 Liberty building for $523,000. Since the value of the land on which the building was situated was equal to its adjusted cost base, there is no capital gain on the sale of the land. Consequently, the total sale price of both the land and the building is not relevant.

2. You sold the 300 Path building for $185,000. The value of the land on which the building was situated was equal to its adjusted cost base, there is no capital gain on the sale of the land. Consequently, the total sale price of both the land and the building is not relevant.

3.You provided appliances (Class 8) with the Path property. The cost of these class 8 appliances was $23,000 and the undepreciated capital cost (UCC) was $3,598 on January 1, 2020. Given the condition of the appliances, you gave them to the tenants who agreed to take them when they moved out.

4. You purchased the 700 Avenue property during 2020 for $1,147,000. That price included an estimated value for land of $200,000.

Required: Calculate your 2020 net employment income.

Required: Calculate your minimum net property income for 2020. Provide separate capital cost allowance (CCA) calculations for each property and specify how much CCA should be taken for each building. Include in your solution any tax consequences associated with the sale of the two buildings and the disposition of the furniture.

Required: Calculate your 2020 net taxable capital income.

Required: Calculate your 2020 Net Income for Tax Purposes (Division B).

Required: Calculate your 2020 Taxable Income (Division C)

Answer rating: 100% (QA)

Part 1 Calculation of Net employment income for 2020 Salary income 45000 Add Nonallowable payment Un... View the full answer