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Determine the total Net Income For Tax Purposes

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Question - On January 1, 2020, Mr. Justin Chan owned 9,500 shares of Air Canada, 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 2020, the following transactions occur:

On February 13th, he gives 3,500 of these shares to his common-law partner Ivy Chan. On this date, the shares are trading at $25.00 per share. Mr. Chan does not elect out of ITA 73(1).

On Apr 9th, he gives the remaining 6,000 shares to his 14 year old son, Jamie Chan. At this time the price of the shares has fallen to $22.50.

On July 1 and September 1, the Air Canada shares pay an eligible dividend of $0.80 per share.

On December 15, both Ivy and Jamie sell all of the shares they have received for $26.25 per share.

Required - Determine the total Net Income For Tax Purposes to be recorded for the 2020 taxation year by

a. Justin

b. common-law partner Ivy

c. His son Jamie

as a result of the preceding transactions.

Reference no: EM132838902

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