TX Set 6 Capital Gains

Question 1

Factors to consider if an item is capital or business income?

Answer 1

• intention at time of purchase
• relationship of transaction to taxpayer business
• nature of asset
• number and frequency of similar transactions
• length of period of ownership
• feasability of taxpayer intention
• reason for sale

Question 2

Election for sale of securities

Answer 2

Taxpayer can elect for sale of securities to be capital. All other then treated the same for the year.

Question 3

How are superficial losses treated? What is the criteria?

Answer 3

• The taxpayer, the taxpayer’s spouse, or a corporation controlled by either the taxpayer or his or her spouse sells a property.
• Any of the above taxpayers acquire or reacquire the same property or an identical property in the 30-day period before or after the sale of the property.
• Any of the taxpayers referred to above still own the property at the end of the 30-day period after the sale of the property.

Loss denied and added to cost base of asset

Question 4

how are shares accounted for?

Answer 4

The weighted average cost per unit is determined as the total price paid for all identical properties held divided by the total number of identical properties owned at that point in time