This year, Mr. White purchased $200,000 of common shares in a company listed on the local...

  

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This year, Mr. White purchased $200,000 of common shares in a company listed on the local stock exchange, with an annual eligible dividend of $5,000. The current fair market value of the shares is $300,000. Mr. White would like to transfer these shares to his wife and 16-year-old daughter. Fast forward 30 years, Mr. White is now a grandfather and gives two of his grandchildren $100,000 each. They invested the funds identically, and each reported interest income of $8,200 and a capital gain of $3,500. Mr. White was then assessed tax on additional income of $19,900. The two Grandchildren are 15 and 14 years of age. Fast forward 40 years, Mr. White passed away on April 1, 20X2. His spouse, Mrs. White, age 75, is still alive but she suffers from serious health issues. Charlotte, their daughter in now age 57. She is married to Sam and they have two children, Thomas, age 16, and Michelle, age 24. Both are students. Thomas, is in high school and Michelle, is completing a bachelor degree. All family members are Canadian residents. The following information is a list of assets and liabilities of Mr. White: Fair market value $ 15,000 Bank account Family residence Cottage Paintings and sculptures Family automobile Registered Retirement Savings Plan (RRSP) TFSA Term deposits (GIC) BC inc. common shares (Canadian corporation) BT inc. shares (Canadian corporation) TOTAL 600,000 250,000 30,000 35,000 400,000 80,000 300,000 200,000 20,000 $ 1.930,000 Cost $ 15.000 300,000 200,000 10,000 60,000 200,000 60,000 300,000 40,000 320.000 $ 1,505,000 Per the will, all assets from Mr. White is transferred to Mrs. White, with a few exceptions. - The ownership of the cottage will be transferred to grandchildren (50% / 50%). - The ownership of the paintings and sculptures will be transferred to Thomas. - The ownership of the family automobile will be transferred to Michelle. The following information is also provided: Until his death, Mr. White was still professionally active and had a net business income of about $20,000 on a yearly basis, earn between January and March in 20X2. The consulting business income was coming from work with a partnership. As a beneficiary from a trust established following the death of his aunt Jenny, Mr. White received $2,000 on March 31, 20X2. Eligible dividend income of $3,000 on BC inc. shares payable on March 15, 20X2, but not been paid at the time of death. Required: 1. Mrs. Charlotte, needs for a report with advice about the tax implications of the death of her father and her questions. 2. She wants an estimation of taxable income for 20X2. 3. She is also interested to know the filing requirements following the tragic event. 4. She would like to know the steps in managing an estate. 5. She is also concerned about the transfer of assets to various members of the family. This year, Mr. White purchased $200,000 of common shares in a company listed on the local stock exchange, with an annual eligible dividend of $5,000. The current fair market value of the shares is $300,000. Mr. White would like to transfer these shares to his wife and 16-year-old daughter. Fast forward 30 years, Mr. White is now a grandfather and gives two of his grandchildren $100,000 each. They invested the funds identically, and each reported interest income of $8,200 and a capital gain of $3,500. Mr. White was then assessed tax on additional income of $19,900. The two Grandchildren are 15 and 14 years of age. Fast forward 40 years, Mr. White passed away on April 1, 20X2. His spouse, Mrs. White, age 75, is still alive but she suffers from serious health issues. Charlotte, their daughter in now age 57. She is married to Sam and they have two children, Thomas, age 16, and Michelle, age 24. Both are students. Thomas, is in high school and Michelle, is completing a bachelor degree. All family members are Canadian residents. The following information is a list of assets and liabilities of Mr. White: Fair market value $ 15,000 Bank account Family residence Cottage Paintings and sculptures Family automobile Registered Retirement Savings Plan (RRSP) TFSA Term deposits (GIC) BC inc. common shares (Canadian corporation) BT inc. shares (Canadian corporation) TOTAL 600,000 250,000 30,000 35,000 400,000 80,000 300,000 200,000 20,000 $ 1.930,000 Cost $ 15.000 300,000 200,000 10,000 60,000 200,000 60,000 300,000 40,000 320.000 $ 1,505,000 Per the will, all assets from Mr. White is transferred to Mrs. White, with a few exceptions. - The ownership of the cottage will be transferred to grandchildren (50% / 50%). - The ownership of the paintings and sculptures will be transferred to Thomas. - The ownership of the family automobile will be transferred to Michelle. The following information is also provided: Until his death, Mr. White was still professionally active and had a net business income of about $20,000 on a yearly basis, earn between January and March in 20X2. The consulting business income was coming from work with a partnership. As a beneficiary from a trust established following the death of his aunt Jenny, Mr. White received $2,000 on March 31, 20X2. Eligible dividend income of $3,000 on BC inc. shares payable on March 15, 20X2, but not been paid at the time of death. Required: 1. Mrs. Charlotte, needs for a report with advice about the tax implications of the death of her father and her questions. 2. She wants an estimation of taxable income for 20X2. 3. She is also interested to know the filing requirements following the tragic event. 4. She would like to know the steps in managing an estate. 5. She is also concerned about the transfer of assets to various members of the family.

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1 Tax Implications of Mr Whites Death and Questions Upon the death of Mr White there are several tax implications to consider Deemed Disposition of Assets When a Canadian resident passes away there is ... View the full answer