Determine Zazz's minimum Net Income For Tax Purposes and Taxable Income for the year ending December...

  

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Determine Zazz's minimum Net Income For Tax Purposes and Taxable Income for the year ending December 31, 2020. Determine Zazz's federal Tax Payable for the year ending December 31, 2020. Zazz Ltd (Zazz) is a Canadian Controlled Private Corporation. For its fiscal year ending December 31, 2020, Zazz reported net income of $849,200 in accordance with GAAP. It also reported income tax expense of $92,000 that consisted solely of instalment payments. The accountant also provided you with the following information: Most capital assets are rented instead of purchased. However, the company did spend $52,000 on leasehold improvements in 2018 for its store. The lease is for 2 years with 2 optional renewals for 2 years each. • The company sold a warehouse for $533,000. At the start of the year, the warehouse's UCC balance was $390,400 while it had a net book value of $415,000 on the date of sale. The building was purchased for $496,000. ● ● Depreciation expense was $19,400. Zazz sold 1,000 shares in its subsidiary, Kahuna Ltd. (Kahuna) for $50 per share. The shares had an ACB of $20 per share. This reduced Zazz's ownership percentage of Kahuna to 75%. Kahuna is associated with Zazz and has been allocated half of the small business deduction. After Zazz sold Kahuna shares, Kahuna issued $28,400 of non eligible dividends to its shareholders. This allowed Kahuna to receive a refund of its non-eligible RDTOH account of $7,600. Zazz included $5,100 in its revenues from a royalty it purchased in 2017. Zazz purchased a membership in a private dining club for its president. The membership cost $5,500 and the president used it 90% of the time to entertain clients. Meals and entertainment costs were $12,900. The company had a $10,700 net capital loss carryover from 2016 at the start of the year. At the end of the 2019, Zazz's non-eligible RDTOH account was $3,100. No other accounts had a balance at the end of 2019 and no dividends were paid by Zazz in 2019. • During 2020, Zazz paid $80,000 of non-eligible dividends to its shareholders. Determine Zazz's minimum Net Income For Tax Purposes and Taxable Income for the year ending December 31, 2020. Determine Zazz's federal Tax Payable for the year ending December 31, 2020. Zazz Ltd (Zazz) is a Canadian Controlled Private Corporation. For its fiscal year ending December 31, 2020, Zazz reported net income of $849,200 in accordance with GAAP. It also reported income tax expense of $92,000 that consisted solely of instalment payments. The accountant also provided you with the following information: Most capital assets are rented instead of purchased. However, the company did spend $52,000 on leasehold improvements in 2018 for its store. The lease is for 2 years with 2 optional renewals for 2 years each. • The company sold a warehouse for $533,000. At the start of the year, the warehouse's UCC balance was $390,400 while it had a net book value of $415,000 on the date of sale. The building was purchased for $496,000. ● ● Depreciation expense was $19,400. Zazz sold 1,000 shares in its subsidiary, Kahuna Ltd. (Kahuna) for $50 per share. The shares had an ACB of $20 per share. This reduced Zazz's ownership percentage of Kahuna to 75%. Kahuna is associated with Zazz and has been allocated half of the small business deduction. After Zazz sold Kahuna shares, Kahuna issued $28,400 of non eligible dividends to its shareholders. This allowed Kahuna to receive a refund of its non-eligible RDTOH account of $7,600. Zazz included $5,100 in its revenues from a royalty it purchased in 2017. Zazz purchased a membership in a private dining club for its president. The membership cost $5,500 and the president used it 90% of the time to entertain clients. Meals and entertainment costs were $12,900. The company had a $10,700 net capital loss carryover from 2016 at the start of the year. At the end of the 2019, Zazz's non-eligible RDTOH account was $3,100. No other accounts had a balance at the end of 2019 and no dividends were paid by Zazz in 2019. • During 2020, Zazz paid $80,000 of non-eligible dividends to its shareholders.

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Determining Zazzs Taxable Income and Tax Payable for 2020 1 Minimum Net Income for Tax Purposes MNIT... View the full answer