Based on your study of this lesson, please choose the best answer.
1. The manner in which a taxpayer operates a woodlot may determine the amount of income tax owing:
a) True b) False
2. Where a woodlot owner can clearly show that he/she expects to profit from operations on the woodlot, the woodlot is referred to as a non- commercial woodlot.
3. A woodlot that is referred to as a commercial woodlot will have income treated as a capital gain.
4. If you inherit a woodlot and make no attempt to operate it as a business, income received from timber sales is treated as business income.
5. A woodlot owner who grows Christmas trees is in the farming business.
6. If you have a woodlot that is used 60% personally, it is considered a non-commercial woodlot by CRA.
7. Where a woodlot owner allows timber to be cut and payment is based on a price per unit, the payment received is considered to be a capital gain.
8. As long as the woodlot is referred to as a commercial, woodlot losses may be realized year after year.
9. Income from a commercial woodlot is to be reported when the wood is cut or shipped.
10. If there are two names on the deed of a woodlot, both of these individuals are the beneficial owners, and therefore automatically share the income from a harvest equally.
11. Cindy purchased a woodlot in 2001 for $30,000. No harvesting has occurred since the purchase. In 2008 she sold the woodlot for $60,000 and there were legal fees of $3,000. What was the taxable capital gain?
a) $30,000 b) $17,000 c) $27,000 d) $13,500
12. If Rachel sold her non-commercial woodlot for $70,000 in 2005 and she was going to receive $10,000 each year for the next seven years, how many years could she spread the capital gain over for tax purposes?
a) one b) two c) five d) seven