Curtin Ltd carries on a manufacturing business and also derives income from the rental of a large number of properties. The rental properties are financed by a fixed term loan of $1 million, repayable over 10 years. Curtin wants to enter into an agreement to assign to assign the loan of $1 million for a lump sum of $800000 Discuss how the lump sum received by the Curtin Ltd will be assessed
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Question 2: 6 Marks Zara Kim is the owner of two residential rental properties, 209 Old Monk Avenue and 12 James Street. These properties were purchased six years ago for $525,000 and $600,000, respectively. In the current year, 209 Old Monk Avenue was sold for $850,000. A reasonable allocation of this amount is considered to be 75% to the building and 25% to the land. The following income and expenses were incurred in renting out the two properties in the current year: Rental: $80,000 Interest on mortgage: ($50,000) Operating costs: ($25,000) Promotion costs for sale of property: ($5,000) Net income: $0 There are no meal or entertainment expenses included in the $5,000 of sales promotion costs. The opening undepreciated capital cost of 209 Old Monk Avenue was $383,500 and that of 12 James Street was $480,000. Required: Zara has asked you to determine her income from the property, assuming she wishes to report the least amount possible for tax purposes in the current year. (Building CCA Class 1-4% CCA rate)
Akash M.
Gordon had a full-time job as a sales manager for a meat wholesaler. Last year, he earned a salary of $85,000; he also received a bonus of $10,000 on March 31st of this year based on his excellent performance last year. He is a member of his employer's defined-benefit pension plan and he is required to contribute 5% of his base salary to the plan each year. In addition to his salary, bonus and pension plan, he enjoys many company benefits. Gordon is a member of his employer's group life insurance plan and group disability plan-his employer pays the premiums in both cases. He is also permitted to use a corporate vehicle for his personal use and like all other employees of the company, Gordon can purchase various meat products at cost. Gordon was able to borrow $120,000 from his employer on January 1st of last year, at a rate of 3% compounded annually to purchase a rental property on Rice Street. The building was valued at $80,000; the land was valued at $40,000. He agreed to repay the loan in full at the end of three years. Gordon was able to rent out the house as of February 1st of last year for $1,300 per month. Rental expenses during the year amounted to $5,780, not including loan interest of $3,600. Excited by his initial success as a landlord, Gordon decided to purchase a second rental property on Leeman Avenue. For this purpose, his wife, Sandra, lent him $130,000 via a loan for value in August of last year. The land was valued at $42,000; the building was valued at $88,000. Like Gordon's first rental property, the second rental property was in great condition and was immediately ready for renting. However, Gordon was only able to secure a tenant in December of last year, charging rent of $1,200 per month. By that time, Gordon had already spent $1,400 on property taxes, $500 in lawn maintenance services, $400 in advertising and loan interest of $3,640 with respect to this property. Both of Gordon's rental buildings fall into CCA class 1, which has a maximum CCA rate of 4%. If Gordon did not claim any CCA on the Rice Street property last year and he sells the property this year for $132,000 with $43,000 of the sale price attributed to the land, what would be the amount of his recapture? a) $0 b) $1,600 c) $3,200 d) $9,000
Breanna O.
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