On July 1, 2020 Esther borrowed $8,000 from the bank and purchased 400 shares in No Hope Ltd. for $20 per share. Esther felt that this was a safe investment because she read online in a blog that No Hope would be paying dividends of $1.50 per share during the last half of 2020. Unfortunately, this didn't happen and she only received eligible dividends totalling $100 during 2020. On December 31 she paid the bank loan interest of $240. On her 2020 tax return, Esther will report:

Question

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Esther's net property income (or loss) is calculated by subtracting the interest paid on the bank loan from the dividends received. She received $100 in dividends and paid $240 in interest. Therefore, $100 - $240 = -$140. However, the correct answer is a net property loss of $102, indicating a possible error in the calculation provided in the choices. The correct calculation should consider the gross-up of eligible dividends for tax purposes, which is not directly mentioned in the choices but is implied by choice B's specific number. Eligible dividends are grossed up by 38% for the 2020 tax year in Canada, making the grossed-up amount $138 ($100 * 1.38). Subtracting the interest paid ($240) from the grossed-up dividend amount ($138) results in a net property loss, but the calculation provided in the choices seems to have an error. The principle behind choice D is correct in showing a loss, but the exact figures provided do not align with standard tax calculations for eligible dividends.

On July 1, 2020 Esther Borrowed $8,000 from the Bank