Hello I need help with this question Thanks 2 Andre Gagnon b

Hello,

I need help with this question. Thanks.

2. Andre Gagnon bought 100 shares of BCE for $30 per share and paid a com mission of $33 on the transaction. In 2011 he sold the share paid a commission of $29.95. He received dividends of $2.10 during the year He lives in Cornwall, Ontario. Calculate the following: (a) The adjusted cost base per share (b) The capital gain (c) The taxable capital gain (d) The taxable dividend (e) The tax on the capital gain and the 2011 dividends if he has taxable income from other sources of $112,000

(a) Computation of adjusted cost base per share

Number of shares bought = 100

Price per share = $30

Commision paid = $33

Adjusted cost base per share = (Number of shares purchased*Price per share)+(Commission paid on the transaction)/Number of shares

= (100*$30)+($33)/100

= $ 30.33

(b) Calculation of capital gain:

Cost of the shares purchased = (Number of shares purchased*Price per share)+(Commission paid on the transaction)

=(100*$30)+($33)

=$3033

Sales proceeds received = (Number of shares sold*selling price per share) - commission paid

= (100*$32)-$29.95

= $3170.05

Capital gain = Sale proceeds - cost of the shares

= $3170.05 - $3033

= $137.05

(c) Taxable capital gain:

Capital gains are not taxed at the marginal tax rates. Only 50% of the capital gain on any sale proceeds is taxed at marginal tax rate. Therefore, taxable capital gain in the given case is 50% of the gain on sale of shares.

Taxable capital gain = 50%($137.05)

= $68.525

(d) Taxable dividend

In the given case, he has received the dividend. Hence, it is treated as eligible dividend. The taxable dividend for eligible dividends is computed by groosing up the eligible dividends by 38%.

therefore, taxable dividend = 138% ( $2.10)

= $ 2.898

(e) Tax on capital gain and 2011 dividends

Tax on capital gain and eligible dividends is 20.35% and 21.64% respectively as per the 2017 marginal tax rates.

Tax on capital gain = 20.35%($68.525)

= $13.95

Tax on eligible dividend = 21.64%($2.898)

= $0.63