Mr. Rhodes purchased a large tract of land near Edmonton 15 years ago for $750,000. It was
Question:
Calculate the capital gains consequences of this sale for 2022 up to and including 2028, assuming that Mr. Rhodes claims the maximum capital gains reserve in 2022 and in all subsequent years.
Mr. Stewart Simms has lived most of his life in Vancouver. In 1998, he purchased a three-bedroom home near English Bay for $125,000. In 2002, he acquired a cottage in the Whistler ski area at a cost of $40,000. In all subsequent years, he has spent at least a portion of the year living in each of the two locations. When he is not residing in these properties they are left vacant. On October 1, 2022, Mr. Simms sold the English Bay property for $915,000 and the cottage at Whistler for $720,000. Mr. Simms wishes to minimize any capital gains resulting from the sale of the two properties.
Required:
Describe how the two residences should be designated to optimize the use of the principal residence exemption. In addition, calculate the amount of the taxable capital gains that would arise under the designation that you have recommended. Show all supporting calculations.
Accounting
ISBN: 978-1118608227
9th edition
Authors: Lew Edwards, John Medlin, Keryn Chalmers, Andreas Hellmann, Claire Beattie, Jodie Maxfield, John Hoggett