Question 1 :

Granite Shore Glass Ltd. has available net capital losses, and the draft asset-sale comparison uses them to offset expected recapture on equipment and building proceeds. What should be corrected before the file is finalized?

The draft is acceptable if the vendor also expects taxable capital gains elsewhere in the same year

Net capital losses generally offset taxable capital gains, not recapture or other ordinary income from depreciable property

Net capital losses can offset recapture once the purchaser agrees to the asset allocation in the purchase agreement

Net capital losses may be applied against recapture if the corporation has no terminal loss claims in the same class

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Question 2 :

An ownership and tax summary for two associated CCPCs shows these limits for the current year.

• Ironbay Tools Ltd. has C$470,000 of active business income and C$470,000 of taxable income.
• Falcon Reach Ltd. has C$140,000 of active business income and C$60,000 of taxable income after loss carryforwards.
• No passive-income or taxable-capital grind applies.

Which allocation avoids wasting any part of the federal business limit?

Allocate C$440,000 to Ironbay and C$60,000 to Falcon Reach

Allocate C$470,000 to Ironbay and C$30,000 to Falcon Reach

Allocate C$360,000 to Ironbay and C$140,000 to Falcon Reach

Allocate C$500,000 to Ironbay and C$0 to Falcon Reach

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Question 3 :

One planning note says the private-company shares will pass to the surviving spouse on a rollover basis under the will. The same note also assumes those shares will be used right after death to fund a cash legacy to the deceased's adult child. What is the clearest issue with that draft?

The draft is acceptable if the child signs a receipt acknowledging the legacy before the shares move

The draft is wrong because private-company shares can never pass to a spouse on a rollover at death

The draft assumes the same shares can both move on the spouse rollover path and remain available to satisfy the child's cash legacy without explaining how

The draft is acceptable if the estate opens a separate bank account before any transfer occurs

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Question 4 :

When Elise Fournier reviews a draft that recommends selling appreciated publicly traded shares and donating the cash to a registered charity, the client intends to donate the full value immediately and has no need to retain the shares. What should Elise revise before the advice is sent?

Keep the draft unchanged because selling first creates the same tax result as donating the shares directly

Revise the draft to compare a direct in-kind donation of the shares, which can be more tax-efficient than selling first

Revise the draft to postpone any donation until next year because donations should follow a share sale

Revise the draft to recommend selling only enough shares to eliminate the accrued gain before donating

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Question 5 :

Élodie Gervais is finalizing a planning recommendation for an owner-manager who wants C$120,000 of annual personal cash, expects fluctuating corporate profits, and wants to preserve some salary-based retirement capacity. A draft recommends dividends only. What must be demonstrated before that single-method recommendation can be supported?

That the retirement-capacity objective can still be met without a meaningful employment-income component

That the dividends can be scheduled monthly without disrupting the owner's cash needs

That the corporation can prepare the dividend reporting and payment process on time

That the owner prefers shareholder distributions and accepts less payroll-based retirement buildup

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Canadian Tax Planning

Granite Shore Glass Ltd. has available net capital losses, and the draft asset-sale comparison uses them to offset expected recapture on equipment and building proceeds. What should be corrected before the file is finalized?

MCQ

0

5

MCQ

0

5

One planning note says the private-company shares will pass to the surviving spouse on a rollover basis under the will. The same note also assumes those shares will be used right after death to fund a cash legacy to the deceased's adult child. What is the clearest issue with that draft?

MCQ

0

5

When Elise Fournier reviews a draft that recommends selling appreciated publicly traded shares and donating the cash to a registered charity, the client intends to donate the full value immediately and has no need to retain the shares. What should Elise revise before the advice is sent?

MCQ

0

5

MCQ

0

5