On January 1, 2018, Ms. Fawn Halpern owned 9500 shares of Zunit Inc., a Canadian public company. These shares were acquired several years ago at a cost of $23.50 per share, a total investment of $223,250.

During 2018, the following transactions occur:

• On February 1, she gives 3500 of these shares to her common-law partner Melvin Young. On this date, the shares are trading at $25.00 per share. Fawn does not elect out of ITA 73(1).
• On March 1, she gives the remaining 6000 shares to her 15 year old daughter Clare. At this time the price of the shares has fallen to $22.50.
• On July 1 and September 1, the Zunit Inc. shares pay an eligible dividend of $0.80 per share.
• On December 1, both Melvin and Clare sell all of the shares they have received for $26.25 per share.

Required:

A. Determine the total Net Income for Tax Purposes to be recorded for the 2018 taxation year by Fawn, her common-law partner Melvin, and her daughter Clare, as a result of the preceding transactions.

B. How would your answer change if Fawn died on July 15, 2018?

Answer rating: 100% (QA)

To calculate the total Net Income for Tax Purposes for each individual we need to consider the taxab... View the full answer