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Sally Earned $210,000 During 20X4

Question 9

Essay

Sally earned $210,000 during 20X4. She also received eligible dividends in the amount of $10,000. She sold a piece of land during the year and recognized a capital gain of $500,000. Sally is married. Her husband earned $100,000 during the year.
Required:
A) Calculate Sally's taxable income and her federal tax liability before the
deduction of any allowable non-refundable tax credits for 1) the normal method, and 2) the alternative minimum tax.
B) Identify which method from A and B above would allow for a deduction of the non-refundable dividend tax credit?
C) Which method will Sally be required to use in 20X4?

Correct Answer:

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