1. A depreciable property is sold by a taxpayer at a price below its capital cost, with no assets remaining in the related CCA class and resulting in a negative UCC balance. What is the tax consequence?
a) Terminal loss
b) Capital loss
c) Capital gain
d) Recapture
2. An individual earns business income and property income. Which of the following statements regarding the distinction between business income and property income is true?
a) Attribution rules apply to both property income and business income.
b) Attribution rules apply to business income but not to property income.
c) The short-year pro-ration for capital cost allowance applies to the computation of business income and not property income.
d) The short-year pro-ration for capital cost allowance applies to the computation of property income and not business income.
3. In 2016, Sports Equipment Inc. provides its employee, Ana, with an annual car allowance of $10,000. This allowance is included in Ana's employment income for 2016. Ana drives 8,000 km for work in 2016.
What is the amount of the deduction Sports Equipment can make with respect to this car allowance when calculating net business income for tax purposes for 2016?
a) $0
b) $2,700
c) $4,140
d) $10,000
4. Mohad uses the second floor of his home exclusively as a home office. In the current taxation year, his business had $10,000 of revenue and he incurred the following expenses relating to his home office:
Utilities and repairs $ 6,000
Home insurance and property taxes $ 2,000
Mortgage principal payments $ 30,000
Mortgage interest $ 20,000
Which of the following amounts is the maximum amount Mohad is allowed to deduct from his business income?
a) $6,000
b) $8,000
c) $28,000
d) $58,000
5. Arbutus Ltd. operates out of a building and has incurred $1,300 in landscaping expenses for the building. Arbutus paid $300 in the current taxation year and $1,000 in the following taxation year. How much is Arbutus allowed to deduct when calculating net income for tax purposes for the current taxation year?
a) $0
b) $300
c) $1,000
d) $1,300