Your neighbor, Mrs. White, has heard that you are studying personal tax. She has come to you with her financial information for 20XX. In 20XX, Mrs. White had employment income of $40,000, property income of $3,000, a business loss of $22,000, an allowable business investment loss of $5,000, income from an
RRSP withdrawal of $2,000, and a capital loss of $40,000 on the sale of shares in a public corporation.
Mrs. White hopes that her losses will result in a net income for tax purposes of
$0.
Required:

Question

Quizplus · Accepted Answer

The Answer is A)

A) A) Mrs. White does not have a taxable income of $0 that she had hoped for as she is unable to use the capital loss (since she had no capital gains in the year). B) If Mrs. White had realized a taxable capital gain of $30,000 in 20XX she would have been able to apply an allowable capital loss of $20,000 ($40,000 × .5). This would add $10,000 to her income, resulting in a net income for tax purposes of $28,000.

A) Mrs. White does not have a taxable income of $0 that she had hoped for as she is unable to use the capital loss (since she had no capital gains in the year).
B) If Mrs. White had realized a taxable capital gain of $30,000 in 20XX she would have been able to apply an allowable capital loss of $20,000 ($40,000 × .5). This would add $10,000 to her income, resulting in a net income for tax purposes of $28,000.

Your Neighbor, Mrs