Martha owns a painting by Canadian artist Maud Lewis. A number of years ago she paid $10,000 to acquire the painting. Based on a recent appraisal, the painting is now worth $35,000.

Inadequate Consideration For each of the two situations below, determine the taxable capital gain to Martha and the adjusted cost base to the purchaser of the painting. Situation A: Martha sells the painting to her brother Keith for proceeds of $42,500. Situation B: Martha sells the painting to her neighbour Maureen for $28,500.

Answer rating: 100% (QA)

Taxable Capital Gain for Martha and Adjusted Cost Base for the Purchaser In both situations ... View the full answer