For the taxation year ending December 31, 2020, Daly Inc. has Taxable Income, before consideration of...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
For the taxation year ending December 31, 2020, Daly Inc. has Taxable Income, before consideration of dividends or salary paid to its sole shareholder, of $34,500. The Company's cash balance, prior to the payment of any salary or dividends is $35,200. For the taxation year ending December 31, 2019, Daly Inc. had Net Income For Tax Purposes and Taxable Income of $12,700. The Company is subject to a combined federal/provincial tax rate of 11.5 percent on all of its Taxable Income for both 2019 and 2020. Bryan Daly, the sole shareholder of Daly Inc., has employment income of over $250,000, and because of this, any additional income will be taxed at a combined federal/provincial rate of 51 percent. The provincial dividend tax credit is equal to 20 percent of the gross up for non-eligible dividends. Mr. Daly has indicated that he would like to remove all of the $35,200 in cash from his Company and has asked you to determine whether it would be better to take it out in the form of all non-eligible dividends or all salary. For the taxation year ending December 31, 2020, Daly Inc. has Taxable Income, before consideration of dividends or salary paid to its sole shareholder, of $34,500. The Company's cash balance, prior to the payment of any salary or dividends is $35,200. For the taxation year ending December 31, 2019, Daly Inc. had Net Income For Tax Purposes and Taxable Income of $12,700. The Company is subject to a combined federal/provincial tax rate of 11.5 percent on all of its Taxable Income for both 2019 and 2020. Bryan Daly, the sole shareholder of Daly Inc., has employment income of over $250,000, and because of this, any additional income will be taxed at a combined federal/provincial rate of 51 percent. The provincial dividend tax credit is equal to 20 percent of the gross up for non-eligible dividends. Mr. Daly has indicated that he would like to remove all of the $35,200 in cash from his Company and has asked you to determine whether it would be better to take it out in the form of all non-eligible dividends or all salary.
Expert Answer:
Answer rating: 100% (QA)
The first step is to calculate the amount of tax that would be paid if Bryan Daly takes out all of t... View the full answer
Related Book For
Intermediate Accounting Volume 1
ISBN: 978-1119496496
12th Canadian edition
Authors: Donald E. Kieso, Jerry J. Weygandt, Terry D. Warfield, Irene M. Wiecek, Bruce J. McConomy
Posted Date:
Students also viewed these accounting questions
-
For the taxation year ending December 31, 2018, George Glass had combined federal and provincial Tax Payable is $13,680. The corresponding figure for 2019 is $2,220. For the year ending December 31,...
-
For the taxation year ending December 31, 2020, Lorne Inc., a Canadian-controlled private company, has a Net Income for Tax Purposes of $340,500. This is made up of $312,400 of active business income...
-
For 2020 an individual had net income for tax purposes of $196,000 and Division C deductions of $18,000. During 2020 the individual had medical expenses of $7,900 and made charitable donations of...
-
Fewer than 20% of M&M candies are green. The hypothesis test results in a P-value of 0.0721. Assume a significance level of = 0.05 a. State a conclusion about the null hypothesis. b. Without using...
-
Explain the relationship between the payroll and personnel cycle and inventory valuation.
-
The Ritz-Carlton has four hotels and resorts in the Caribbean and Mexico. Suppose that for one of these hotels, management expects occupancy rates to be 95 percent in December, January, and February;...
-
The October 1, bank statement of Blakes Hamburger just arrived from First State Bank. To prepare the bank reconciliation, you gather the following additional data: a.The following checks are...
-
Continue with the facts of Problem 57. What are the Federal income tax withholding requirements with respect to Martinho's sale? Who pays the withheld amount to the U.S. Treasury?
-
Bar AB has the angular motions shown. Determine the velocity and acceleration of the slider block C at this instant. aB = {7.777i 3.537j} m/s ac = a + BC C/B - w/cC/B ai = {7.777i 3.537j} + (ck) (1...
-
2. Consulting: A University employs a Professor whose base output is a constant K. The Professor chooses to spend effort e consulting, giving her income pe at personal cost C(e) e/2. Unfortunately,...
-
Alex has access to B, C, and D in the diagram. What concern should he raise to the university's identity management team?
-
List some of the uses of reserve reports.
-
Unproved reserves can be subdivided into two categories. These categories are: a. Proved and probable b. Probable and possible c. Behind-the-pipe and shut-in d. Probable developed and undeveloped e....
-
Music festivals around the world have not occurred for almost two years. But with COVID-19 vaccination programs under way and mass testing available across the world, fans are confident that they...
-
Migrants and refugees sometimes earn much less than local workers for the same work in agriculture, forestry, mining, manufacturing, or construction. Suppose governments mandate that all workers...
-
A communication path is a link between (a) nodes (b) artifacts (c) networks (d) devices
-
Solomon Corporation's adjusted trial balance for the year ending December 31, 2015, is: Solomon Corporation Adjusted Trial Balance December 31, 2015 Debit Cash Accounts Receivable Equipment...
-
A local politician is concerned that a program for the homeless in her city is discriminating against blacks and other minorities. The following data were taken from a random sample of black and...
-
Structured entities or variable interest entities (VIEs) have long been on the agendas of the financial accounting standard- setting communities. Recently, however, standards have been updated to...
-
The trial balance of Slum Dog Fashion Centre Inc., a private company following ASPE, contained the following accounts at November 30, the company?s fiscal year end: Adjustment data: 1. Supplies on...
-
Chessman Corporation factors $600,000 of accounts receivable with Liquidity Financing, Inc. on a with recourse basis. Liquidity Financing will collect the receivables. The receivable records are...
-
Munro Limited is a small company with two divisions. One division trades in specialized equipment for walkers and mountaineers, and the other sells artists materials. The company has acquired rights...
-
You are undertaking the fieldwork for the audit of the financial statements of CAREFREE Limited for the year ended 31 December 2020. CAREFREE owns and operates a network of six private nursing homes,...
-
You are auditing a manufacturing company and have drafted a management letter that contains reference to matters to increase the efficiency of company systems and the general profitability of the...
Study smarter with the SolutionInn App