On February 12, 2019 he received 2,000 shares of BRX, a Canadian public corporation from his...

On February 12, 2019 he received 2,000 shares of BRX, a Canadian public corporation from his late mother’s estate. His mother purchased these shares at a weighted average cost of $3.75 a share. The fair market value of these shares on the date of transfer was $5.50 per share. Allen purchased another 100 shares on March 5, 2019 at $4.85 a share. On April 1st the company paid out a stock dividend of 10%, which resulted in an increase in the paid up capital of $4.00 for each share issued. He sold 1,200 shares on July 15, 2019 at $4.00 a share. On August 10, 2019 he purchased 250 shares at a price of $4.25 a share. At the end of the year he still owns these shares. Calculate capital gains from identical properties? This question takes place in Canada.

Solutions

Expert Solution

If the client receives anything as a gift, they are generally considered to be received at fair market value on the date received.

Capital gains -

Stock as on July 15, 2019 - 2310 SHS @5.34 (adjusted cost basis) = $12,335.40

Capital Gains -

Proceeds - 1200 SHS @4.00 = $4,800

Basis 1200 SHS $5.34 = $6,408

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Capital gain/loss ($1,608) Capital losses can be used to offset capital gains and reduce the overall tax you will pay. You can carry capital losses back 3 years or forward into future years.

Date	Transaction	Cost	No. of units	Cost
Feb 12, 21019	BRX Shares	11000	2000	5.5	FMV
Mar 5, 2019	Purchase - 100 SHS @4.85	485	100	4.85
		11485	2100
April 1, 2019	Dividend - Reinvested-10%	840	210	4.00
	New Cost	12325	2310	5.34
July 15, 2019	Sales - 1200 SHS @4.00	4800	1200
	New Cost	7525	1110	6.78
Aug 10, 2019	Purchase - 250 SHS @4.25	1062.5	250
	New Cost	8587.50	1360	6.31

ekkarill92 answered 1 year ago

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