AIT805 Ch 11 Assignment Problems

AIT805 Ch 11 Assignment Problems - Chapter 11 Solution 1...

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Unformatted text preview: Chapter 11 Solution 1 (Basic) 2005 2006 2007 2008 Par. 3( a ) Income from business................... $ 54,000 $ 32,000 Nil $ 62,500 Income from property.................... 42,500 22,500 $ 18,000 10,500 $ 96,500 $ 54,500 $ 18,000 $ 73,000 Par. 3( b ) Taxable capital gains.................... 11,000 2,500 5,000 9,000 Allowable capital losses................ (2,000) (2,500) (1) (3,500) Nil Par. 3( c ) $ 105,500 $ 54,500 $ 19,500 $ 82,000 Par. 3( d ) ABIL.............................................. (3,750) n/a n/a n/a Business loss................................ n/a n/a (75,000) n/a Par. 3( e ) Income from Division B.............. $ 101,750 $ 54,500 Nil $ 82,000 Sec. 112 Inter-company dividends............... (42,500) (22,500) (10,500) $ 59,250 $ 32,000 Nil $ 71,500 Sec. 110.1 Charitable donations: (2) Carryover................................ n/a (3,000) Current.................................... (23,000) (9,000) (13,000) $ 36,250 $ 23,000 Nil $ 55,500 Par. 111(1)( b ) Net capital losses (3) ....................... (9,000) (1,500) (500) $ 27,250 $ 23,000 Nil $ 55,000 Par. 111(1)( a ) Non-capital losses (4) ...................... (27,250) (23,000) (24,750) Taxable income.......................................................... Nil Nil Nil $ 30,250 NOTES TO SOLUTION (1) A maximum of $2,500 can be deducted in 2006. (2) Charitable donations: 2005: Lesser of: (a) 75% of $101,750 = $76,313 (b) $23,000 Carryforward: Nil 2006: Lesser of: (a) 75% of $54,500 = $40,875 (b) $9,000 Carryforward: Nil 2007: Lesser of: (a) 75% of Nil = Nil (b) $3,000 Carryforward: $3,000 2008: Lesser of: (a) 75% of $82,000 = $61,500 (b) $3,000 + $13,000 = $16,000 Carryforward: Nil (3) Net capital losses 1999 net capital loss converted to 2005 rates: $13,500 / ................................. $ 9,000 Net capital loss deducted in 2005 to the extent of net taxable capital gains.................. (9,000) Nil 2006 net capital loss not utilized..................................................................................... $ 2,000 2007 net capital loss deducted to the extent of net taxable capital gains...................... (1,500) $ 500 2008 remaining net capital loss deducted in 2008 to the extent of net taxable capital gains (500) Available for carryforward............................................................................................... Nil (4) Non-capital losses Par. 3( d ) Loss from business in 2007...................................................... $ 75,000 Dividends deducted under section 112..................................... 18,000 $ 93,000 Add: net capital loss deducted...................................................................................... 1,500 $ 94,500 Less: par. 3( c ):........................................................... par. 3( a ) dividends $ 18,000 par. 3( b ) taxable capital gain............................................ 1,500 19,500 $ 75,000 Losses utilized:2005.................................................................................Losses utilized:2005....
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This note was uploaded on 06/03/2009 for the course BUSINESS AIT 805 taught by Professor Shirenekhan during the Winter '09 term at Seneca.

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AIT805 Ch 11 Assignment Problems - Chapter 11 Solution 1...

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