Corporate%20Tax%20-%20two%20additional%20problems - Example...

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Example 1– Corporate Tax: The Magic Co. is a Canadian Controlled Private Corporation. Magic reports the following sources of income for its December 31, 2009 fiscal year-end. Capital Gains $60,000 Interest Income 12,000 Active Business Income 260,000 Dividends from non-connected corporations 9,000 Dividend from Merlin Co., a connected corporation 27,000 Additional Information 1. Magic paid $15,000 in dividends in 2009 and received a 2008 dividend refund of $6,000 2. Magic is associated with other corporations. It’s share of the Annual Business limit is $190,000, prior to any reduction. 3. Magic’s Taxable Capital for purposes of the Annual Business Limit is $2,000,000 4. Magic owns 25% of Merlin. Merlin’s 2009 dividend refund is $20,000 5. Magic’s RDTOH account balance at December 31, 2008 was $32,000. 6. 100% of Magic’s income is earned in Canada 7. Magic has net capital losses carried forward of $24,000. Required: For Magic Co., compute for 2009: a) Minimum Part I Tax b) Part I Refundable Tax c) Part IV Tax d) The RDTOH account balance as at December 31, 2009 e) Dividend Refund
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Solution 1: Active Business Income 260,000 Taxable Capital Gains 30,000 Interest income 12,000 Dividend Income 36,000
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This note was uploaded on 05/11/2011 for the course ECON 1021 taught by Professor Michealbay during the Spring '11 term at American Intl. University.

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Corporate%20Tax%20-%20two%20additional%20problems - Example...

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