Mr. I.N. Vestor has come to you for advice on some of his 2020 transactions. He has
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- Mr. I.N. Vestor has come to you for advice on some of his 2020 transactions. He has provided selected information about these transactions below. In particular, Mr. Vestor is retiring and is slowly selling some of his assets to supplement his retirement income. Mr. Vestor wants to know what the Division B income and deductions are from the following transactions. 1. Mr. Vestor gave his 16-year-old daughter $10,000 cash in June 2020, to allow her to invest in the market. His daughter purchased $10,000 of bonds. Interest paid to the end of 2020 was $500. 2. Mr. Vestor has an outstanding loan from his employer in the amount of $10,000. He paid $100 of interest on this loan for the year. The load was outstanding for the entire year. Mr. Vestor used the proceeds of the loan to pay for a vacation. 3. Mr. Vestor received dividends from Canadian Pacific (CP) Railway Limited (a Canadian public corporation) in the amount of $25,000. He sold some of these shares on June 1, 2020, and generated a (gross) capital gain of $10,000. 4. Mr. Vestor paid $3,000 on interest on a bank loan in 2020. The proceeds from the load were used to buy the CP stock. The loan was secured by a mortgage on his principal residence. 5. Mr. Vestor owns shares of Tetley, a British corporation. During the year, he received dividends of $1,700 (in Canadian dollars), net of $300 (Cdn dollars) tax withheld. Required: In good form, compute I.N. Vestor’s Division B income for 2020, using the above information only. Provide a brief explanation of why you omitted any of the above information from your calculation of Division B income for 2020. Assume that the prescribed rate for all of 2020 was 6%. Using the Canadian income tax.
Related Book For
Financial Accounting Tools for Business Decision Making
ISBN: 978-1118644942
6th Canadian edition
Authors: Paul D. Kimmel, Jerry J. Weygandt, Donald E. Kieso, Barbara Trenholm, Wayne Irvine
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