Reference no: EM132596955

Question - Dr. No just cannot seem to say no. When people ask him for things, he tries to comply. His family members are well aware of this, and others are now starting to catch on. Examples of his generosity are given below.

1. Dr. No gave his wife $10,000 cash in June 2018, to allow her to invest in the market. Mrs. No decided to be careful and invested the $10,000 in Series 1HMS007 Bonds. Interest paid to the end of the year amounted to $500.

2. James, the 13-year-old son of Dr. No, asked his father for some of his shares in Goldfinger Enterprises. Dr. No gifted the shares that had a fair market value at the time of $900. The cost of the shares to Dr. No was $1,250. James decided to sell the shares in December for proceeds of $1,050.

3. Jaws, a brother-in-law of Dr. No, asked for help as he was having difficulty finding work recently - something about dental insurance. Dr. No, feeling some level of pity, sold him his rental property (building only) on January 3, 2018, valued at $100,000, for $10,000 down and the remainder as an interest-free note. The cost of the property to Dr. No was $90,000 one year earlier. Dr. No has not claimed any CCA on the property. Repayment of the note is required in equal annual instalments of $10,000 each year for the next nine years on January 2 of each year. Present value of the payments is approximately $75,000 (at 7% rate). Net rental income for 2018 is $8,000.

Required - Provide Dr. No with an analysis of the income that he must report in 2018 as a result of these activities. Provide reasons for all included items and justifications for all excluded amounts.