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NewDocument-page2 - Question 2(37.5 marks Anthony is em IO...

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Unformatted text preview: Question: 2 (37.5 marks) Anthony is em IO ed retUrn. |nfo p. y by Paper Inc rmatmn regarding Anth ‘ t‘Iehas (equested your assistance in preparing his 2010 income tax ony S flnancral activities for 2010 is given below. Anthony rece' . ”9d a sal "’ . $27,000. CPP and El ofary 0f $110300. From this amount, Paper Inc. deducted income tax Of the premium to a Private$2'910' donations to a registered charity of $1,000, and Anthony's share of paid the f0||owing_ group health Insurance plan of $400. In addition to his salary. Paper Inc Pa er In ' ' Grgu t c 5 share of the premium to the private group health plan $ 600 Su [Ii erm life Insurance premium ' 500 A [33:01???” unemployment insurance plan premium 900 o nthony s dues to a professional accounting association (““3"- $1500) 1000 3250;1{1 ”59d? Vel’neie owned by Paper Inc. to carry out his employment duties and for personai > 50% 'Fm v h: e Vehicle Originally cost $34,000 and has an UCC of $16,000. In 2010, Anthony drove the 601p. use 3 Icie 23,000km of Whlch 18,000km was for employment purposes and 5,000km was forgonat use. Paper Inc paid all of the Operating costs of $4,000. reduced Shard»? change rectum“: M . ./ During 2010, Paper Inc gave Anthony a wedding gift that cost $800 and paid him $700 tuition fee for a unrversrty~ course in marketing to prepare him for a management position. He also received an all expense paid vacation at a winter resort valued at $5.00? for meeting his sales quota. 2. Anthony owns shares in a private corporation left to him by his late father. In 2010, he received dIvrdends of $6,000, from the corporation. He aiso repaid 3 $20,000 loan to the corporation on 53 December 30, 2010. He had borrowed the money from the company in 2007 (Ignore imputed ‘00 iii) interest benefit in 2010). In 2008, CRA reassessed his 2007 personal tax return to include $20,000. In 2010, Anthony sold 100 of his 800 shares of XX Inc. a public corporation for $12 per share. The shares were received in early 2009 as a stock divided valued at $10 per share. He had acquired 700 shares of XX in 2007 for $3 per share. On June 30, 2010. Anthony also sold his shares in DD Ltd. a CCPC, for $20,000. He acquired the shares in 2004 for $5,000. Ali of DD‘s assets are used in an active business. 3. Anthony also runs a small visual arts consulting business on the side. His financial statements shows a net profit of $12,100 for the year ended December 31, 2010. Following are some of the items included in Net income calculations. - Amortization $ 3000 . Advertising 2500 a Travel 2500 - Bank charges and interest expense 1200 - Office expense 925 Advertising Includes charitable donation of $450 to his church and $1200 which represents 10% of the cost of his second wedding reception. He claims 10% of the wedding guests were business associates. Travel is for 3 day out of town stay inclusive of meals and lodging. Bank charges and interest include $150 of interest paid on deficient tax instalments. 0" Mam" 23'“. 2010. he gang-$38 a new compumragrdtia a designing sotlwere with a chat "3 Quinn Hot elm; limt In stness. The UCC be in t 9 lama day for $1.700 Nuw he hm Mn Wml"“"“ "' "" Cl 9 0 ng of the various classes of assets are ' c'ass 8: equipmeng 358 10: old computer 5 Butt Class 12: small toolslsoftwere :1 :2": Anthon s - clement: £33: died In 2009- in March, 2010, In addition to a cash Ilfllryultl Amtuuw "thew-"l at e valued at $800. which originally cool snot) In “mum's-n 2"!” t'“ "*"' “W necklace for $1 600 H , . e ' ' I November 2010““ $4.000- also received an antique table valued at I'LUUIL mm“ he puts] in Anthony was divorced In year 2009. and in accordance with a legal ewe-mm"! in! tit-“ll "" "'"m'" su . hispgzrhifiiarzmem of $12,000 to his former spouse. He also paid $20.000 t" nuwwl vain-'9'“ u" 80 July 1, 2010, Anthony purchased a GIC for $20,000 with an interest rate of hm. smut dtlttually n November 30, 2010, Anthony sold his home for $300,000 due to financial challenges ell-w N- marrtage breakdown. He bought this house in 2006 for $310.00”- In 2010, Anthony had following other receipts and disbursements Lottery winnings 3 1mm Proceeds from the sale of a collectible movie poster that originally costs 5400 ‘ 3-H” Life insurance proceeds from his late mother 39.0”” Investment counsel fee paid 7“" Medical and dental expenses 4.00” Proceeds from the sale of a bond 20.3w The bond proceeds of $20,600 Included $600 of Interest for the period tram Queue: 1. 2mm In March 31. 2010. The bond was purchased on November 30. 2009 for ilUJUU. The purchase price included accrued interest on the bond of $200. Required: Calculate Anthony's minimum net income for tax purposes in accordance with the tunnel at Section 3 of the Income Tax Act ...
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