Reference no: EM131577203
Taxation Project 1 -
Required: Determine the following amounts for Paul and Christine:
a) Paul's net income for tax purposes for 2016. Briefly explain whether Paul should claim expenses as a sales or non-sales employee. For all calculations, provide an explanation why items were excluded, if any. Show all calculations for sales and non-sales employee expenses.
b) Determine the maximum CCA that Christine can deduct in computing her business income, including any terminal loss or recapture. Calculate the ending UCC balances for all CCA pools. Ignore leap years.
c) Beginning with accounting income, and using the proper T2 Schedule 1 format to add and subtract items, determine Christine's minimum business income for tax purposes. Briefly explain why certain items were excluded for Christine.
d) Using the business income determined in part c), calculate Christine's net income for tax purposes.
Taxation Project 2 -
Question 1 - It is late March 2017. You have just met with your client Ahmed about his taxes. Ahmed has several tax issues for the 2016 taxation year that he needs your help with.
Required:
a) Complete the following calculations for the 2016 taxation year. Provide explanations for omitted amounts.
i) Ahmed's rental income and any taxable capital gains and allowable capital losses from the sale of the properties and shares that he sold during 2016.
ii) Ahmed's taxable dividend amounts and federal dividend tax credit amounts.
iii) Ahmed's maximum deductible moving expenses. Explain any omitted items.
b) Following the aggregating formula in section 3 of the ITA, calculate net income for tax purposes (Division B income) for Ahmed for 2016.
c) Determine the taxable income for Ahmed for 2016.
d) Note any carryover amounts that Ahmed may be able to use in years prior to 2016 or future years, along with any restrictions on the use of the loss and the year of expiry, if any.
e) Determine the 2016 net income for tax purposes and taxable income for Zeinab. Briefly discuss the tax consequences regarding the Applesoft Shares for Ahmed and Zeinab.
f) Determine the 2016 federal Part I tax payable for Ahmed, taking advantage of all tax credits. Explain any amounts that are excluded from the calculation.
g) Determine Ahmed's estimated RRSP deduction limit for 2017.
Question 2 - Rehan Incorporated is a CCPC. The accountant has correctly determined net income for tax purposes to be $652,000 for the year ended December 31, 2016. The following additional information is available:
Non-capital loss carryforward $40,000
Eligible portfolio dividends 25,000
Interest income (Canadian) 10,000
Accounting gain on disposal of assets 65,000
Taxable capital gain on disposal of assets 0
Refundable dividend tax on hand (RDTOH) balance, end of preceding year 2,500
Prior-year dividend refund 2,000
Dividend from wholly-owned subsidiary 50,000
Dividend refund received by a wholly-owned subsidiary 4,000
Percentage of income earned in a Canadian province 95%
Share of annual business limit used by wholly-owned subsidiary 200,000
Dividend paid to shareholders during year 60,000
Required: For the 2016 taxation year, do the following:
a) Determine the taxable income for Rehan.
b) Determine the active business income for Rehan.
c) Determine the aggregate investment income for Rehan.
d) Calculate Part I federal tax payable for Rehan.
e) Calculate Part IV tax payable for Rehan.
f) Calculate dividend refund for Rehan.
g) Summarize the total taxes payable by Rehan.
Attachment:- Projects.rar