Final%20Exam%28April%202008%29%20-%20answers%20-%20solution00

Minimum net income for tax purposes indicate any

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MINIMUM NET INCOME FOR TAX PURPOSES Indicate any available loss carry over amounts (if any). (1 mark) Income from employment Income from business and property Other income or deduction $98,900 1,831 (17,847) Minimum Net Income for Tax Purposes (if any) $82,884 Loss carry over amounts (if any): Additional space to show your work (if you need to): 7
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E. MINIMUM TAXABLE INCOME (1 mark) Net income for tax purposes (your number above) $82, 884 Reconciling items to taxable income (if any): No adjustments…. MINIMUM TAXABLE INCOME (IF ANY) 82,884 Additional space to show your work (if you need to): 8
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F. MINIMUM FEDERAL TAX PAYABLE (5 marks) Taxable income (your number above) $82,884 Gross Federal Tax: 15% x $37,178 = $5,576 22% x $37,178 = $8,179 26% x ($82,884 - $72,358) = $2,737 $16,492 Gross Federal Tax: $16,492 Federal Tax Credits Please use the following page to show additional work : Basic personal……………………………..$9,600 Equivalent to married………………………9,600 CPP…………………………………………1,990 EI……………………………………………..720 Employment…………………………………1,000 Child (2 x $2,000)…………………………...4,000 Transit passes……………………………….1,500 Child fitness (max $500 x 2)………………..1,000 Adoption credit (max $10,445)…………….10,445 Tuition………………………………………...650 Education/textbook (4 x $140)……………….560 Medical expense credit (see below)…………1,774 Total base…………………………………...42,839 x 15% Donation tax credit ($200 x 15%) + ($50 x 29%) Dividend tax credit 11/18 x 45% x $1,725 Medical expense credit: $3,700 of qualifying medical expenses must exceed lesser of: i)$1,926 and ii) 3% x 82,384 $3,700 - $1,926 = $1,774 (6,426) (44) (474) Total Federal Tax Credits: ($6,944) FEDERAL TAX PAYABLE (IF ANY) $9,548 9
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PART TWO – Question 2 (20 marks) A. Determine the minimum Net Income For Tax Purposes (e.g. Division B income) for Sigma for its taxation year-end June 30, 2007. You should compute the capital cost allowance (if applicable) and cumulative eligible capital deduction (if applicable) by using the attached Schedule 8 and Schedule 10, respectively. (10 marks) NET INCOME FOR TAX PURPOSES (10 marks) Accounting income before taxes $946,000 Add: Depreciation………………………………………..$80,000 Inventory reserve……………………………………41,500 Political contribution…………………………………...500 Donations……………………………………………10,000 Provision for low price guarantee…………………….5,600 Taxable capital gain on land (50% x ($160,000-$72,000)…… ..44,000 Recapture…………………………………………….13,400 $195,000 $195,000 $195,000 Deduct: Capital cost allowance (use amount from schedule 8) Cumulative capital deduction (use amount from Schedule 10) Terminal loss Legal fees to raise capital (20% x $5000)……………….$1,000
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  • Winter '10
  • TranCheung
  • Taxation in the United States, taxable capital gain

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