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AIT805 Ch 11 Assignment Problems

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

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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 × ½ / ¾ ................................. \$ 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 ................................................................................. \$ 27,250 2006 ................................................................................. 23,000 2008 ................................................................................. 24,750 75,000 Closing balance ............................................................................................................. Nil

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

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