Bob sold a capital property on December 31, 2020 for $300,000. $280,000 is payable on December 31, 2021, and the balance was paid immediately in cash. The adjusted cost base of the property was $170,000 and the selling costs totalled $10,000. Which one of the following amounts represents the minimum taxable capital gain in 2020?

Question

Quizplus · Accepted Answer

The calculation of the taxable capital gain for Bob can be illustrated as follows:

Proceeds of disposition = $300,000
Selling costs = $10,000
Net proceeds of disposition = $290,000

Adjusted cost base (ACB) = $170,000

Capital gain = $290,000 - $170,000 = $120,000

However, only half of the capital gain is taxable, as it is considered a taxable capital gain. Therefore, the minimum taxable capital gain in 2020 would be:

Minimum taxable capital gain = ($120,000 ÷ 2) - $0 = $60,000

Since the ACB and selling costs are already factored in, there is no need to subtract them again. Therefore, the correct answer is C) $12,000.

Bob Sold a Capital Property on December 31, 2020 for $300,000