Marvin Combs is 43 years old and is employed by a Canadian public company. His annual salary is $112,468, none of which is commissions. Because of his outstanding work during 2020, he has been awarded a $20,000 bonus. The bonus will be paid in 2024 and 2025 at the rate of $10,000 each year to help ensure he stays with the Company. As Marvin expects to remain at the Company for the rest of his working life, he accepts the delayed payment with no
complaints and minimal misgivings.
For 2020, his employer withheld EI premiums of $856 and CPP contributions of $2,898. The employer also withheld professional association dues of $3,400 and contributions to the United Way of $2,500.
Also withheld were registered pension plan contributions of $6,800. On his behalf, the employer also made a contribution to the plan of $4,600.
Marvin's spouse, Leslie Combs, 46 years old and is legally blind. Her Net Income For Tax Purposes is $8,460.
The Combs have three children. Information on these children is as follows:
Sharon is 17 years old, in good health, and has income from part time jobs of $7,625.
Suzanne is 19 years old and has serious breathing problems that prevent her from working on a full time basis. She lives with Marvin and Leslie and has income from part time jobs of $7,250.
Samantha is 23 years old and attends university on a full time basis for 11 months of the year. Marvin pays her tuition fees of $10,300, along with textbook costs of $1,100. She lives with Marvin and Leslie and is in good health. She has investment income of $12,800. The investments were purchased with income from part-time jobs during her high school years.
Other Information:
1. Marvin is provided with an automobile by his employer. The vehicle is used largely for employment related activity. Total milage for 2020 was 62,000 kilometers, with only 4,000 of this being personal use. The vehicle is leased by his employer at a rate of $456 per month, including a payment for insurance of $43 per month. It is available to Marvin for 10 months during 2020. During the other 2 months, the employer required that it be returned to their garage.
2. In 2017, Marvin received options to purchase 300 shares of his employer's common stock at a price of $72 per share. At the time the options were granted, the market price of the stock was $70 per share. In January, 2020, when the shares are trading at $85 per share, Marvin exercises all of the options. He is still holding these shares at the end of the year.
3. During 2020, Marvin receives several gifts from his employer:
• As a reward for winning the company's Employee Of The Month Award, he receives an expense paid weekend in a local hotel. The regular price for this package was $1,200.
• As is the case for all of the company's employees, Marvin received a $600 gift certificate for merchandise at a local department store.
• At Christmas, the company provides each employee with a basket of gourmet food. The value of this basket is $450.
4. During 2020, Marvin spent $8,400 on employment related meals and entertainment with clients of his employer. His employer reimbursed all but $1,000 of these costs.
5. During 2020, Marvin and Leslie decide to purchase their first family home (they have rented for the last 15 years). After considerable searching, they identify the perfect property one block from their rented apartment and purchase it for $462,000. As is his employer's policy, he is granted an interest free loan of $200,000 to assist with this purchase. The loan was granted on April 1, 2020. Assume that the prescribed rate is 2 percent throughout 2020.
6. During 2020, both Sharon and Samantha had rhinoplasty surgery. Marvin had to pay $2,800 for emergency services after Sharon's nose suffered serious trauma during a martial arts class. He also paid $13,500 for rhinoplasty surgery to reduce and reshape Samantha's nose which she believes has greatly improved her appearance. These amounts are included in the following medical expenses of the family, all of which were paid by Marvin: Required:
A. Determine Marvin's minimum Net Income For Tax Purposes for the 2020 taxation year.
B. Determine Marvin's minimum Taxable Income for the 2020 taxation year.
C. Based on your answer in Part B, determine Marvin's federal Tax Payable for the 2020 taxation year.

Question

Marvin Combs is 43 years old and is employed by a Canadian public company. His annual salary is $112,468, none of which is commissions. Because of his outstanding work during 2020, he has been awarded a $20,000 bonus. The bonus will be paid in 2024 and 2025 at the rate of $10,000 each year to help ensure he stays with the Company. As Marvin expects to remain at the Company for the rest of his working life, he accepts the delayed payment with no
complaints and minimal misgivings.
For 2020, his employer withheld EI premiums of $856 and CPP contributions of $2,898. The employer also withheld professional association dues of $3,400 and contributions to the United Way of $2,500.
Also withheld were registered pension plan contributions of $6,800. On his behalf, the employer also made a contribution to the plan of $4,600.
Marvin's spouse, Leslie Combs, 46 years old and is legally blind. Her Net Income For Tax Purposes is $8,460.
The Combs have three children. Information on these children is as follows:
Sharon is 17 years old, in good health, and has income from part time jobs of $7,625.
Suzanne is 19 years old and has serious breathing problems that prevent her from working on a full time basis. She lives with Marvin and Leslie and has income from part time jobs of $7,250.
Samantha is 23 years old and attends university on a full time basis for 11 months of the year. Marvin pays her tuition fees of $10,300, along with textbook costs of $1,100. She lives with Marvin and Leslie and is in good health. She has investment income of $12,800. The investments were purchased with income from part-time jobs during her high school years.
Other Information:
1. Marvin is provided with an automobile by his employer. The vehicle is used largely for employment related activity. Total milage for 2020 was 62,000 kilometers, with only 4,000 of this being personal use. The vehicle is leased by his employer at a rate of $456 per month, including a payment for insurance of $43 per month. It is available to Marvin for 10 months during 2020. During the other 2 months, the employer required that it be returned to their garage.
2. In 2017, Marvin received options to purchase 300 shares of his employer's common stock at a price of $72 per share. At the time the options were granted, the market price of the stock was $70 per share. In January, 2020, when the shares are trading at $85 per share, Marvin exercises all of the options. He is still holding these shares at the end of the year.
3. During 2020, Marvin receives several gifts from his employer:
• As a reward for winning the company's Employee Of The Month Award, he receives an expense paid weekend in a local hotel. The regular price for this package was $1,200.
• As is the case for all of the company's employees, Marvin received a $600 gift certificate for merchandise at a local department store.
• At Christmas, the company provides each employee with a basket of gourmet food. The value of this basket is $450.
4. During 2020, Marvin spent $8,400 on employment related meals and entertainment with clients of his employer. His employer reimbursed all but $1,000 of these costs.
5. During 2020, Marvin and Leslie decide to purchase their first family home (they have rented for the last 15 years). After considerable searching, they identify the perfect property one block from their rented apartment and purchase it for $462,000. As is his employer's policy, he is granted an interest free loan of $200,000 to assist with this purchase. The loan was granted on April 1, 2020. Assume that the prescribed rate is 2 percent throughout 2020.
6. During 2020, both Sharon and Samantha had rhinoplasty surgery. Marvin had to pay $2,800 for emergency services after Sharon's nose suffered serious trauma during a martial arts class. He also paid $13,500 for rhinoplasty surgery to reduce and reshape Samantha's nose which she believes has greatly improved her appearance. These amounts are included in the following medical expenses of the family, all of which were paid by Marvin:  Required:
A. Determine Marvin's minimum Net Income For Tax Purposes for the 2020 taxation year.
B. Determine Marvin's minimum Taxable Income for the 2020 taxation year.
C. Based on your answer in Part B, determine Marvin's federal Tax Payable for the 2020 taxation year.

Quizplus · Accepted Answer

The Answer of Marvin Combs is 43 years old and is employed by a Canadian public company. His annual salary is $112,468, none of which is commissions. Because of his outstanding work during 2020, he has been awarded a $20,000 bonus. The bonus will be paid in 2024 and 2025 at the rate of $10,000 each year to help ensure he stays with the Company. As Marvin expects to remain at the Company for the rest of his working life, he accepts the delayed payment with no
complaints and minimal misgivings.
For 2020, his employer withheld EI premiums of $856 and CPP contributions of $2,898. The employer also withheld professional association dues of $3,400 and contributions to the United Way of $2,500.
Also withheld were registered pension plan contributions of $6,800. On his behalf, the employer also made a contribution to the plan of $4,600.
Marvin's spouse, Leslie Combs, 46 years old and is legally blind. Her Net Income For Tax Purposes is $8,460.
The Combs have three children. Information on these children is as follows:
Sharon is 17 years old, in good health, and has income from part time jobs of $7,625.
Suzanne is 19 years old and has serious breathing problems that prevent her from working on a full time basis. She lives with Marvin and Leslie and has income from part time jobs of $7,250.
Samantha is 23 years old and attends university on a full time basis for 11 months of the year. Marvin pays her tuition fees of $10,300, along with textbook costs of $1,100. She lives with Marvin and Leslie and is in good health. She has investment income of $12,800. The investments were purchased with income from part-time jobs during her high school years.
Other Information:
1. Marvin is provided with an automobile by his employer. The vehicle is used largely for employment related activity. Total milage for 2020 was 62,000 kilometers, with only 4,000 of this being personal use. The vehicle is leased by his employer at a rate of $456 per month, including a payment for insurance of $43 per month. It is available to Marvin for 10 months during 2020. During the other 2 months, the employer required that it be returned to their garage.
2. In 2017, Marvin received options to purchase 300 shares of his employer's common stock at a price of $72 per share. At the time the options were granted, the market price of the stock was $70 per share. In January, 2020, when the shares are trading at $85 per share, Marvin exercises all of the options. He is still holding these shares at the end of the year.
3. During 2020, Marvin receives several gifts from his employer:
• As a reward for winning the company's Employee Of The Month Award, he receives an expense paid weekend in a local hotel. The regular price for this package was $1,200.
• As is the case for all of the company's employees, Marvin received a $600 gift certificate for merchandise at a local department store.
• At Christmas, the company provides each employee with a basket of gourmet food. The value of this basket is $450.
4. During 2020, Marvin spent $8,400 on employment related meals and entertainment with clients of his employer. His employer reimbursed all but $1,000 of these costs.
5. During 2020, Marvin and Leslie decide to purchase their first family home (they have rented for the last 15 years). After considerable searching, they identify the perfect property one block from their rented apartment and purchase it for $462,000. As is his employer's policy, he is granted an interest free loan of $200,000 to assist with this purchase. The loan was granted on April 1, 2020. Assume that the prescribed rate is 2 percent throughout 2020.
6. During 2020, both Sharon and Samantha had rhinoplasty surgery. Marvin had to pay $2,800 for emergency services after Sharon's nose suffered serious trauma during a martial arts class. He also paid $13,500 for rhinoplasty surgery to reduce and reshape Samantha's nose which she believes has greatly improved her appearance. These amounts are included in the following medical expenses of the family, all of which were paid by Marvin:  Required:
A. Determine Marvin's minimum Net Income For Tax Purposes for the 2020 taxation year.
B. Determine Marvin's minimum Taxable Income for the 2020 taxation year.
C. Based on your answer in Part B, determine Marvin's federal Tax Payable for the 2020 taxation year.

Marvin Combs Is 43 Years Old and Is Employed by a Canadian