In the current year, Mary entered in to the following separate independent transactions: a) Mary sold shares of a public corporation to her husband. The shares, which had a value of $10,000 at the time of the sale, originally cost $4,000. Mary sold them to her husband for $7,000 in cash. During 2020, Mary’s husband received dividends of $500 on these shares. In January 2021, Mary’s husband sold the shares. Assume the couple do not elect out of the 73(1) rollover. b) Mary transferred shares of a public corporation with a fair market value of $8,000 to her RRSP. The shares originally cost $10,000 when first purchased by Mary. Required: (a) Describe the tax consequences, in detail, of these transactions for Mary, and her husband in 2020 and 2021.
In the current year, Mary entered in to the following separate independent transactions: a) Mary sold shares of a public corporation to her husband. The shares, which had a value of $10,000 at the time of the sale, originally cost $4,000. Mary sold them to her husband for $7,000 in cash. During 2020, Mary’s husband received dividends of $500 on these shares. In January 2021, Mary’s husband sold the shares. Assume the couple do not elect out of the 73(1) rollover. b) Mary transferred shares of a public corporation with a fair market value of $8,000 to her RRSP. The shares originally cost $10,000 when first purchased by Mary.
Required: (a) Describe the tax consequences, in detail, of these transactions for Mary, and her husband in 2020 and 2021.
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