COMMERCE 4SB3
EXAM Multiple
Choice Questions
cheat sheet 2024
prep McMaster
University
Question MC 1 (43 minutes) [Chapters 2 to 8]
Determine the single most appropriate response to the following questions.
1) Carla lives in Detroit, Michigan, USA. She commutes daily to Windsor, Ontario, Canada,
where she is employed by Ford Motor Company of Canada Limited. She works 9 am to 5 pm,
Monday through Friday. Which one of the following best indicates Carla’s residency status
for Canadian income tax purposes for 2011?
(a) A full-time resident
(b) A part-year resident
(c) A non-resident
(d) A deemed resident (sojourner)
2) ABC Inc. provides Ginger Kelly with a company car. The car is leased for $500/month
(including 13% HST and excluding insurance) and was made available to her for eight
months. ABC pays all of the operating costs which amounted to $3,500 in 2011. Ginger
drove 13,000 kilometres in 2011 of which 8,000 were for business. What is the minimum
taxable benefit that Ginger must include on her 2011 personal tax return?
(a) $2,200 rounded
(b) $1,500 rounded
(c) $3,517 rounded
(d) $4,850 rounded
3) Which of the following is a taxable benefit?
(a) A cash Christmas gift to an employee from the employer valued at $450.
(b) Payment of the tuition for an employee completing a degree that will benefit the
employer.
(c) A 20% discount on the employer’s merchandise, available to all employees.
(d) Subsidized meals offered to all employees of the company assuming the price is
approximately equal to the cost.
4) Scott Bicycle Manufacturing Ltd. is a CCPC. Brian Mills, one of the employees, was granted a
stock option on October 11, 2003 for 10,000 shares at $3 per share. Brian exercised the
stock option on September 30, 2006 when the market price was $6 per share. In February
2011, Brian purchased a new home and sold the shares for $7 each. The fair market value
on October 11, 2003 was $4. What is the effect of the above on Brian’s income for tax
purposes, assuming Brian wants to minimize taxes?
(a) $15,000 in 2006
(b) $15,000 in 2011
,(c) $30,000 in 2006
(d) $35,000 in 2011
, 5) Theresa Gain presents the following information with her 2011 tax
return: Capital Gains:
Shares $1,500
Personal-use property 750
Listed personal property 600
Capital losses:
Shares $ 820
Personal-use property 1,100
Listed personal property 240
Listed personal property losses of prior years 105
Net capital losses from 2009 310
What is the minimum taxable capital gain (rounded to the nearest dollar) to be reported
on Theresa’s tax return?
(a) $468
(b) $843
(c) $1,264
(d) $1,000
6) Sunny River purchased an unlimited life franchise (arm’s length transaction) at a cost of
$100,000 during 2011. The maximum tax deduction related to the franchise for the taxation
year ending December 31, 2011 is:
(a) $2,275
(b) $10,000
(c) $4,550
(d) $5,250
7) On June 1, 2011 Beta Ltd, purchased a franchise for $91,000. The franchise has a limited life
of 13 years. Which one of the following amounts represents the maximum amount of capital
cost allowance that Beta can deduct for its year ended July 31, 2011?
(a) $4,778
(b) $7,000
(c) $3,500
(d) $1,170
8) Lambda sold a capital property on October 31, 2011 for $200,000 with a cash down
payment of $15,000. The balance of $185,000 is payable on October 31, 2015. The adjusted
cost base of the property was $115,000 and the selling costs were $7,000. Which one of the
following amounts represents the minimum taxable capital gain (rounded to the nearest
dollar) in 2011?
(a) $39,000
(b) $5,850
(c) $7,800
(d) $15,600
EXAM Multiple
Choice Questions
cheat sheet 2024
prep McMaster
University
Question MC 1 (43 minutes) [Chapters 2 to 8]
Determine the single most appropriate response to the following questions.
1) Carla lives in Detroit, Michigan, USA. She commutes daily to Windsor, Ontario, Canada,
where she is employed by Ford Motor Company of Canada Limited. She works 9 am to 5 pm,
Monday through Friday. Which one of the following best indicates Carla’s residency status
for Canadian income tax purposes for 2011?
(a) A full-time resident
(b) A part-year resident
(c) A non-resident
(d) A deemed resident (sojourner)
2) ABC Inc. provides Ginger Kelly with a company car. The car is leased for $500/month
(including 13% HST and excluding insurance) and was made available to her for eight
months. ABC pays all of the operating costs which amounted to $3,500 in 2011. Ginger
drove 13,000 kilometres in 2011 of which 8,000 were for business. What is the minimum
taxable benefit that Ginger must include on her 2011 personal tax return?
(a) $2,200 rounded
(b) $1,500 rounded
(c) $3,517 rounded
(d) $4,850 rounded
3) Which of the following is a taxable benefit?
(a) A cash Christmas gift to an employee from the employer valued at $450.
(b) Payment of the tuition for an employee completing a degree that will benefit the
employer.
(c) A 20% discount on the employer’s merchandise, available to all employees.
(d) Subsidized meals offered to all employees of the company assuming the price is
approximately equal to the cost.
4) Scott Bicycle Manufacturing Ltd. is a CCPC. Brian Mills, one of the employees, was granted a
stock option on October 11, 2003 for 10,000 shares at $3 per share. Brian exercised the
stock option on September 30, 2006 when the market price was $6 per share. In February
2011, Brian purchased a new home and sold the shares for $7 each. The fair market value
on October 11, 2003 was $4. What is the effect of the above on Brian’s income for tax
purposes, assuming Brian wants to minimize taxes?
(a) $15,000 in 2006
(b) $15,000 in 2011
,(c) $30,000 in 2006
(d) $35,000 in 2011
, 5) Theresa Gain presents the following information with her 2011 tax
return: Capital Gains:
Shares $1,500
Personal-use property 750
Listed personal property 600
Capital losses:
Shares $ 820
Personal-use property 1,100
Listed personal property 240
Listed personal property losses of prior years 105
Net capital losses from 2009 310
What is the minimum taxable capital gain (rounded to the nearest dollar) to be reported
on Theresa’s tax return?
(a) $468
(b) $843
(c) $1,264
(d) $1,000
6) Sunny River purchased an unlimited life franchise (arm’s length transaction) at a cost of
$100,000 during 2011. The maximum tax deduction related to the franchise for the taxation
year ending December 31, 2011 is:
(a) $2,275
(b) $10,000
(c) $4,550
(d) $5,250
7) On June 1, 2011 Beta Ltd, purchased a franchise for $91,000. The franchise has a limited life
of 13 years. Which one of the following amounts represents the maximum amount of capital
cost allowance that Beta can deduct for its year ended July 31, 2011?
(a) $4,778
(b) $7,000
(c) $3,500
(d) $1,170
8) Lambda sold a capital property on October 31, 2011 for $200,000 with a cash down
payment of $15,000. The balance of $185,000 is payable on October 31, 2015. The adjusted
cost base of the property was $115,000 and the selling costs were $7,000. Which one of the
following amounts represents the minimum taxable capital gain (rounded to the nearest
dollar) in 2011?
(a) $39,000
(b) $5,850
(c) $7,800
(d) $15,600
