Taxable Capital Gains Canada
April 4th, 2010
Question: Are disposition costs taxable for capital gains? (Canada)?
Are dispostion costs taxable for capital gains?
Im having trouble with a homework problem. We bought at asset for 5,000 and sold it two year later for 10,000; with disposition costs of 1,000. If the profit on the asset (say land) is treated as a capital gain....what is the taxable income for the transaction. I think it is 10,000- the cost- the disposition; but im not sure eaxaclty how to treat this. Please help
Answer: The costs of disposition are included in the calculation of the cost base.
POD $10,000
ACB ($5,000 + $1,000)
Capital Gain $4,000
Taxable Capital gain: 1/2 x $4,000 = $2,000
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