Tse received $9,000 in cash for the T Ltd. shares, with the balance payable at the rate of $9,000 annually for the next six years. The Q Ltd. shares were sold for cash.
4. A local farmer has been trying to purchase Tse hobby farm land. Tse purchased the land in 20X2 for $69,000. In July 20X9, Tse received $2,000 from the farmer, for which she granted him an option to purchase the land. The option is open for two years and allows the farmer to purchase the land for $100,000.
5. In February 20X9,Tse paid an investment counsellor $300 for investment advice. The same month, she purchased 5,000 units of ABC mutual fund for $10 per unit. An additional 3,000 units were purchased in April 20X9, at $14 per unit. On October 31, 20X9, ABC fund distributed $1,500 of taxable Canadian dividends, which Tse reinvested in the fund, thereby acquiring another 100 units. On December 3, 20X9, Tse sold 2,000 units of ABC at $16 per unit. At year end, the fund units were valued at $18.
6. To obtain the funds to complete the purchase of the ABC mutual fund units, Tse increased the mortgage on her house by $20,000. She incurred interest of $500 on this amount before paying off the mortgage when the house was sold.
7. In 20X8, Tse invested in a real estate project with her friend, a real estate agent and part-time developer. Together, they purchased a parcel of land and constructed four town homes at a cost of $500,000. In 20X9, the four town homes were sold for $580,000 to a single buyer, who planned to use them as rental properties. Tse share of the gain was 40%. No cash was invested in the project, which had been funded entirely with bank financing.
8. Tse sold shares of X Ltd. (a public corporation) for $18,000 during the year. She had acquired the shares in 20X4 for $25,000.
9. Most of Tse investments have been in blue-chip shares that pay dividends. Recently, she has decided to invest and trade in speculative Canadian mining shares and commodity futures. Before she does so, she wants to know the tax implications of gains and losses on such trading.
Required:
1. Calculate Tse minimum net income for tax purposes for the 20X9 taxation year in accordance with the aggregating formula of section 3 of the Income Tax Act.
2. Explain to Tse the potential tax consequences of gains and losses realized on trading speculative Canadian mining shares and commodity futures.
3. What will be the tax consequences to Tse if the option on the farmland is exercised the following taxation year?

Under the terms of the agreement, Tiffany will receive the $200,000 cash in exchange for her 50 percent interest in ROF. Tiffany’s tax basis in her ROF stock is $50,000. Carlos will receive the building and land in exchange for his 50 percent interest in ROF. His tax basis in the ROF stock is $100,000. Assume for purposes of this problem that the cash available to distribute to the shareholders has been reduced by any tax paid by the corporation on gain recognized as a result of the liquidation.
a. What amount of gain or loss does ROF recognize in the complete liquidation?
b. What amount of gain or loss does Tiffany recognize in the complete liquidation?
c. What amount of gain or loss does Carlos recognize in the complete liquidation?
d. What is Carlos’s tax basis of the building and land after the complete liquidation?
Assume Tiffany owns 40 percent of the ROF stock and Carlos owns 60 percent. Tiffany will receive $160,000 in the liquidation and Carlos will receive the land and building plus $40,000.
e. What amount of gain or loss does ROF recognize in the complete liquidation?
f. What amount of gain or loss does Tiffany recognize in the complete liquidation?
g. What amount of gain or loss does Carlos recognize in the complete liquidation?
h. What is Carlos’s tax basis in the building and land after the complete liquidation?