Indusco Inc. is a Canadian Controlled Private Corporation (Company). Its taxation year ends on December 31 of every year. The Company’s condensed income statement is given below.

Revenue		2846000
expenses		1905000
operating income		941000
other income:
eligible portfolio dividend	52000
interest	26000
gain on sales of class 8 assets	225000	303000
income before tax		1244000

Other information related to expenses:

1. Amortization of CCA: The operating income was reduced by a charge for amortization of $623,000.

At the beginning of 2018, the company has balance in class 1 of $1,000,000.The only assets in this class is the company building. The company has this building since 2001.

In 2018, the company acquired a new building at a cost of $650,000 of which $125,000 was allocated to land on which the building is situated. The building is used 100 percent for non-residential purposes and allocated to a separate class 1. One-half of the residential is used for manufacturing and processing.

January 01, 2018, the balance in the class 8 was $4,200,000.During the year, there was an addition to this class was in the amount of $700,000Also, Class 8 assets with the cost of $400,000 were sold for the proceeds of $550,000.The net book value of the assets in the accounting record was $325,000. There was numerous assets remaining in the class at the end of the year.

At the beginning of 2018, the UCC in the class 10 was $800,000 reflecting the company’s fleet of trucks. As the company is changing to a policy of leasing its trucks, all of the trucks were sold for $687,000. The capital cost of the truck was $1,200,000. And the net book value was equal to the sales proceeds of $687,000 for the year.

2. Landscaping: The Company spent $95,000 on landscaping for its main office building. The amount was recorded as assets in the accounting records and because the works have an unlimited life, no amortization was recorded on the asset.

3. Advertising: The Company spent $75,000 on advertisement in the fortune Magazine, a U.S. based publication. Over 905 of the magazine non-advertising content is original editorial content. This advertisements were designed to promote sales in Canadian cities located near US border.

4. Travel and Entertainment: Included in the travel cost deducted in 2018, was $12,000 for airline ticket and $41,400 for business meals and entertainment.

The company paid and deducted for accounting purposes, a $2,500 initiation fee for corporate membership in the Highland Golf and Country club.

5. Taxes on Vacant Land: The Company paid and deducted property taxes of $15,000on a vacant land that is being held for possible future expansion of its head quarter site.

Other Information:

1. Indusco declared and paid taxable dividend of $83,000during 2018. Of this total $54,000 was designated as eligible.

2. The balance of Indusco’s refundable dividend tax on hand was $111,000 on December 31, 2017. The dividend refund for the year 2017 was $33,000.

3. Indusco was associated with two other Canadian Controlled Private Corporations, Indusco has been allocated $125,000 of the annual business limit.

4. Indusco’s Canadian Active Business Income is equal to its net business income for tax purposes. One-half of the Canadian active business income result from manufacturing and processing activities.

5. At the beginning of 2018, Indusco has a net capital loss carry forward of $42,000 and a non-capital loss carry forward of $18,000. The company intent to deduct the maximum amount of these carry forward during 2018.

Required: Calculate the following. Show all the calculations even though the result of the calculation is nil.

A. Indusco’s net income for tax purposes and taxable income for the year ending December 31, 2018.

B. Minimum federal Part I tax payable for the year ending December 31, 2018.

C. The balance of Refundable Dividend Tax On Hand at the end of December 31, 2018.

D. Indusco’s Dividend refund for the year ending December 31, 2018.

E. Indusco’s minimum federal taxes payable for the year ending December 31, 2018.

Answer rating: 100% (QA)

Required Calcul ate the following Show all the calculations even though the result of the calculation is nil A Ind us co s net income for tax purposes ... View the full answer