Question

Question a)

Mr. Jones purchased 250 shares of Ruth Limited on February 1 of the current year for $20 per share. On May 1 of the current year, he purchased 100 more shares for $25 per share. On June 20 of the current year, Mr. Jones sells 100 shares for $15 per share. His allowable capital loss on June 20 is $643.00.

	True
	False

Question c)

Which of the following is not included in ITA 53 as an adjustment to the adjusted cost base of an asset?

	CCA deductions taken.
	Forgiveness of debt on property.
	Government grants.
	Undeducted interest and property tax on vacant land

Answer 1

Question (a)

True

	Date	shares	price per share	total amount (in$)
purchase	Feb-01	250	20	5000
purchase	May-01	100	25	2500
sale	Jun-20	100	15	1500
Average price of the share available to Jones as on date of sales
			(5000+2500)/(250+100)
			21.43	$
Hence capital loss will be
		sale of 100 shares	1500	$
	Less:	cost of 100 shares to Jones (21.43*100)	2143	$
		CAPTAL LOSS	-643	$

Question (b)

Undeducted interest and property tax on vacant land is not included in ITA 53 as an adjustment to the adjusted cost base of an asset as the same is in the nature of undeducted as the same should be itemised first in your tax return and included in expenses of your cost then only it could be included in ITA 53.

Trust this clarifies the questions.