Question

Determine the taxable capital gain (loss) on the sale of the Sculpture. Briefly justify your answer/show all workings. (1 Mark)

Sculpture

Lisa gave a sculpture, valued at $18,900, to her friend in June 2020. The sculpture was purchased for $480 in December 2000 and repaired in March 2016 for $1,250.

Answer 1

Long-term capital gain = full value of consideration received – (indexed cost of acquisition + indexed cost of improvement + cost of transfer), where: Indexed cost of acquisition = cost of acquisition x cost inflation index of the year of transfer/cost inflation index of the year of acquisition.

As in the case no index is given, the taxable capital gain is  

FULL VALUE OF CONSIDERATION	18900
LESS:COST OF AQUISITION	480
LESS; COST OF IMPROVEMENT	1250
TAXABLE CAPITAL GAIN	17170