Rodem Inc. is a Canadian controlled private corporation. The Company began operations on January 1, 2017 and
Question:
Rodem Inc. is a Canadian controlled private corporation. The Company began operations on January 1, 2017 and uses a taxation year that ends on December 31. The following data summarize the operations for the years from 2017 to 2020. 2017 2018 2019 2020 Income (Loss) from business $110,000 ($48,000) $185,000 ($42,000) Charitable Donations 3,200 5,800 4,100 2,900 Capital Gains (Losses) On Land 18,000 (9,000) 12,000 2,000 Capital Gains (Losses) on shares - - - (8000) Business investment loss (56,000) - (15,000) - Dividends from Taxable Canadian Corporations 11,000 19,000 18,000 12,000 The company has a net capital loss balance of $9,000 which arose in 2013. It is the policy of the Company to deduct charitable donations prior to any loss carry overs. It also has a policy of minimizing non-capital loss carryovers, as opposed to net capital loss carryovers.
Required:
1. Compute the taxable income for the years indicated according to the ordering rules in section 3 and show the amounts that would be available at the end of the year. Organize your answers line-by-line across years, rather than one year at a time. (39%)
2. Compute Part I federal tax payable for 2020. Assume that the company’s active business income is $120,000 and 35% of taxable income was attributed to the U.S. (9%)
3. Show all calculations whether they are necessary to the final answer.
Financial Accounting A User Perspective
ISBN: 978-0470676608
6th Canadian Edition
Authors: Robert E Hoskin, Maureen R Fizzell, Donald C Cherry