Mr. Investor developed considerable expertise in high-tech industries due to his

Question

Mr. Investor developed considerable expertise in high-tech industries due to his many years of experience in the field. During 2015 and 2016 he borrowed sufficient capital to invest in the shares of over 100 high-risk technology companies, especially companies which did not pay dividends but which he believed had considerable potential for rapid market appreciation. Many of the shares were sold within three or four days of acquisition. During 2016 his investing activities generated a net gain of $45,000. The $45,000 is:

Question 1 options:

not included in income

included in income on business account

included in income on capital account

reported as either business income or a capital gain at Mr. Investor's option

none of the above

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Question 2 (1 point)

Derrick owns a 10-acre undeveloped property in a rural location. Derrick paid $10,000 for the property about 10 years ago. He has agreed to sell a 2-acre plot to an individual who plans to build a home on the site. The selling price is $14,000. Derrick's taxable capital gain is:

Question 2 options:

$12,000

$6,000

$4,000

$2,000

none of the above

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Question 3 (1 point)

Taxpayer A sold equipment used in his proprietorship for $35,000. Costs associated with the purchase of the equipment were: original cost ($24,000), capital improvements after purchase ($5,000), and legal fees ($600). Outlays and expenses prior to sale include fixing-up expenses ($800), advertising costs ($200), and legal fees ($400). What is A's taxable capital gain?

Question 3 options:

$2,000

$3,000

$4,000

$8,250

none of the above

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Question 4 (1 point)

Jack, the owner-manager of Jack Company, purchased a plot of land owned by the company for $10,000. At the date of the transaction, the land, situated on a secluded lake, was valued at $100,000. Jack paid a deed transfer tax of $5,000 and legal fees of $5,000 on closing. What is Jack's adjusted cost base for future capital gains purposes?

Question 4 options:

$110,000

$100,000

$20,000

$10,000

none of the above

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Question 5 (1 point)

Sonny bought patio furniture two years ago for $1,300. Yesterday he sold it for $600. Calculate his allowable capital loss.

Question 5 options:

$700

$350

$150

$0

none of the above

not included in income

included in income on business account

included in income on capital account

reported as either business income or a capital gain at Mr. Investor's option

none of the above

Explanation / Answer

Ans-1 included in income on business account.

Ans-2 $4000

Ans - 3 $3000

Ans-4 $ 20000

Ans-5 none of the above

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