When Closely Related Groups for Tax Purposes Elect Not to Charge

question 3

Multiple Choice

When closely related groups for tax purposes elect not to charge GST/HST to members of the group, which of the following applies?

• A)There is an actual tax saving for the group.
• B)There is an actual tax saving for the member only.
• C)An actual tax saving does not take place until the following year.
• D)An actual tax saving does not take place.

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Definitions:

Rental Activity

Involves renting out property or equipment as a source of income, with tax implications based on the duration of rental and type of property.

Depreciation Deduction

A tax deduction that allows a taxpayer to recover the cost of property or assets that have a useful life beyond the tax year, by spreading the cost over the life of the property.

Depreciation Tables

Charts provided by the IRS to assist taxpayers in calculating the depreciation expense of an asset for tax purposes over its useful life.

Four-Plex

A residential building divided into four separate units or apartments, each functioning as a separate dwelling.