Question 1

Match between columns
                        Premises: Canadian Controlled Private Corporation
Federal Tax Abatement
General Rate Reduction
Small Business Deduction
Full Rate Taxable Income
Private Corporation
Annual Business Limit
Permanent Establishment

Accepted Answer

The Answer of A corporation that provides the services of is...

Question 2

Tembina Ltd. is a Canadian public company. For the year ending December 31, 2020, it has Net Income For Tax Purposes of $135,000, including foreign business income of $27,000. The foreign government withheld $4,050 in taxes on this income, resulting in a net remittance of $22,950. None of the Company's income involves manufacturing and processing and, based on the ITR 402(3)formula, 91 percent of the Company's income was allocated to a province. In calculating Taxable Income, the Company deducts $23,000 in dividends received from taxable Canadian corporations, a non-capital loss carry forward of $51,000, and a net capital loss carry forward of $19,000.
Determine the Company's Part I Tax Payable for the year ending December 31, 2020. Include in your answer any carry overs available at the end of the year.

Accepted Answer

The answer of Tembina Ltd. is a Canadian public company....

Question 3

Limited Inc. is a Canadian controlled private corporation. For the fiscal year ending December 31, 2020, its Net Income For Tax Purposes of $475,000 is made up of active business income of $360,000 and $115,000 of Adjusted Aggregate Investment Income. For 2019, the company's Adjusted Aggregate Investment Income was $84,000. Its only deduction in the determination of 2020 Taxable Income is a non-capital loss carry forward of $75,000. Because of its association with another company, Limited's share of the annual business limit is $375,000. The associated company has no Adjusted Aggregate Investment Income for 2019 and 2020. Determine Limited's small business deduction for the year ending December 31, 2020, assuming that the combined Taxable Capital Employed In Canada of Limited and its associated company was: Case 1 - $11,000,000 for 2020 and $14,500,000 for 2019. Case 2 - $13,500,000 for 2020 and $10,800,000 for 2019.

Accepted Answer

The answer of Limited Inc. is a Canadian controlled private...

Question 4

For the year ending December 31, 2020, Brokton Inc. has Taxable Income of $472,000, all of which is active business income. Of this total, $305,000 results from M&P activity. The Company is a CCPC and is associated with three other CCPCs. The companies have agreed that Brokton's share of the annual business limit will be $140,000. Determine the Company's federal Tax Payable for the year ending December 31, 2020. Include in your solution any M&P deduction available.

Accepted Answer

The answer of For the year ending December 31, 2020,...

Question 5

Match between columns
                        Premises: Full Rate Taxable Income
Canadian Controlled Private Corporation
Private Corporation
Small Business Deduction
Federal Tax Abatement
Annual Business Limit
Permanent Establishment
General Rate Reduction

Accepted Answer

The Answer of Two or more corporations that have an is...

Question 6

For the year ending December 31, 2020, Tuleta Ltd., a Canadian public company, has Taxable Income of $296,000. Of this total, $165,000 qualifies for the M&P deduction. Calculate Tuleta Ltd.'s federal Tax Payable for the year ending December 31, 2020. Include in your solution any M&P deduction available.

Accepted Answer

The answer of For the year ending December 31, 2020,...

Question 7

Danforth Inc. is a Canadian controlled private corporation. For the year ending December 31, 2020, the Company has Taxable Income of $262,000, all of which is active business income. Of this amount, $201,000 results from M&P activity. As it is associated with two other corporations, its share of the annual business limit is $117,000. Determine the Company's federal Tax Payable for the year ending December 31, 2020. Include in your solution any M&P deduction available.

Accepted Answer

The answer of Danforth Inc. is a Canadian controlled private...

Question 8

Lardon Inc. is a CCPC throughout the year ending December 31, 2020. Lardon is not associated with any other company. For 2020, the Company has Net Income For Tax Purposes of $632,000, an amount that includes $553,000 in manufacturing and processing profits (as per ITR 5200). The Company's Net Income For Tax Purposes also includes foreign source business income of $40,000 and taxable capital gains of $39,000. The jurisdiction in which the foreign business income was earned withheld an amount that will result in Lardon being entitled to a foreign tax credit of $6,000. The Company's only deduction in calculating Taxable Income is a donation to a registered charity of $187,000.
Due to rumours of illegal activities, just prior to year end, Lardon lost two major customers and many of its key staff.
Determine the amount of Lardon's small business deduction and M&P deduction for the year ending December 31, 2020, assuming that the Company deducts all of the $187,000 of charitable donations. Do you believe that deducting all of the donations is the best alternative for Lardon? Explain your conclusion.

Accepted Answer

The answer of Lardon Inc. is a CCPC throughout the...

Question 9

Bartlett Operations Inc. is a Canadian controlled private corporation throughout 2020. It has Net Income For Tax Purposes of $476,000, a figure that includes $424,000 in manufacturing and processing profits (as per ITR 5200). The $476,000 also includes foreign source business income of $25,000 and taxable capital gains of $27,000. Because of withholding on the foreign source business income, the Company is entitled to a foreign tax credit of $3,700. The Company's only deduction in the calculation of Taxable Income is donations to registered Canadian charities in the amount of $201,000. Bartlett is not associated with any other company and anticipates large increases in Taxable Income in the next few years.
Determine the amount of Bartlett's small business deduction and M&P deduction for the year ending December 31, 2020, assuming that the Company deducts all of the $201,000 of charitable donations. Do you believe that deducting all of the donations is the best alternative for Bartlett? Explain your conclusion.

Accepted Answer

The answer of Bartlett Operations Inc. is a Canadian controlled...

Quiz 12: Taxable Income and Tax Payable for Corporations

For each of the key terms listed, indicate the BEST definition of that term, or that none of the definitions apply.

For each of the key terms listed, indicate the BEST definition of that term, or that none of the definitions apply.