Reference no: EM133054406

QUESTION ONE - Determine the amount of interest to be included in income in Years 1, 2, and 3 for each of the following situation. Income tax reference: ITA 12(1)(c), 12(3), (4), (11).

Debra purchased a $10,000 bond on its issue date, November 1, Year 1. The bond pays interest at 6%, compounded annually. Debra will receive the interest when the bond matures on October 31, Year 3.

QUESTION TWO - Anne received the following dividend income during the current year:

$1,000 of eligible dividends from taxable Canadian corporations

$1,000 of non-eligible dividends from taxable Canadian corporations

$1,000 of foreign dividends. The foreign country withheld $150 in foreign tax and Anne received the net amount of $850.

Determine the amount of dividend income to be included in Anne's property income for the current year. Income tax reference: ITA 12(1)(j), (k), 82(1).

QUESTION THREE - At the end of the current year, Fred owned two residential rental properties. Rental property #1 cost $125,000 (land $50,000; building $75,000) and at the close of last year had a UCC of $64,000. Rental property #2 was acquired in the current year for $210,000 (land $80,000; building $130,000). Revenue and expenses for the rental properties during the year were as follows:

	Property #1	Property #2	Total
Revenue	$13,200	$4,500	$17,700
Expenses:
Mortgage interest	(0)	(3,000)	(3,000)
Repairs & maintenance	(5,000)	(0)	(5,000)
Property tax	(3,100)	(1,000)	(4,100)
Insurance	(500)	(200)	(700)
	(8,600)	(4,200)	(12,800)
Income	$4,600	$300	$4,900

Determine the maximum CCA deduction for the rental properties for the current year. Income tax reference: Reg. 1100(11), 1101(1ac).