Module 6: Capital gains and losses - PD Net

In 1988, Samara sold the shares for a net loss of $3,000 and repurchased them within 20 days
for $25,000. Her CGA at the time informed her that she had a non-claimable superficial loss.
Calculate the amount of Samara’s taxable capital gain or loss for the current year.
Solution
Question 9
Bonnie Unrah granted an option to Pete Wilson to purchase a parcel of land. The option agreement is as
follows:
Date of option agreement: January 2, Year 1
Consideration: Pete paid Bonnie a non-refundable amount of $2,500 (on January 2, Year 1) for the right to the
option to purchase the land.
Agreement: Parcel of land may be purchased by Pete Wilson for total proceeds of $50,000, which includes the
$2,500 amount previously paid for the right if the option is exercised on or before June 30, Year 3.
On June 30, Year 3, Pete exercised the option to purchase the parcel of land and paid $50,000 The ACB of the
land to Bonnie is $10,000.
Calculate Bonnie’s capital gain for the appropriate years.
Solution
Question 10
This year, Nancy sold several acres of farmland to an arm’s length party for net proceeds of $940,000. The
cost of the land in 1996 was $240,000. According to the sales agreement, $340,000 was paid at the time the
agreement was signed and $100,000 was payable at the end of each of the next six years. Compute the
taxable capital gain Nancy must report in the current year.
Solution
Question 11
Explain how the tax treatment of capital gains encourages capital investment and risk taking.
Solution
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