Tax - Ch10 Solutions

Tax - Ch10 Solutions - CHAPTER 10 INDIVIDUALS:...

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CHAPTER 10 INDIVIDUALS: DETERMINATION OF TAXABLE INCOME AND TAXES PAYABLE KC 10-7 [ITA: 56(1)(a.2), 60(c), 60.03, 117(2), 117.1(1), 118(1)(a), 118(2),(3), 118.8 – Federal tax and Senior credits] (i) Pension income not split: Federal income tax: 15% x $41,544 $6,232 22% x 3,556 782 $45,100 7,014 Deduct non-refundable tax credits: 118(1)(a) Basic personal amount $10,527 118(1)(a) Spouse amount ($10,527 - $6,000) 4,527 118(2) Age amount $6,537 – 15% ($45,100 - $32,961) 4,716 118(3) Pension amount 2,000 118.8 Amounts transferred from spouse (Age) 6,537 $28,307 x 15% (4,246 ) Federal tax payable $2,768 (ii) Pension income split: Mr. and Mrs. Senior are assumed to split eligible pension income ($32,000) so that each reports an equal amount ($16,000). [50% of the eligible pension income is the maximum allocation allowed]. This increases Mrs. Senior’s net income to $22,000 [ITA 56(1)(a.2)] and reduces Mr. Senior’s net income and taxable income to $29,100 [ITA 60(c) & 60.03].
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Tax - Ch10 Solutions - CHAPTER 10 INDIVIDUALS:...

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