In 20X3, Carol Fortier was transferred by her employer to Vancouver from Toronto. She has made a

Question:

In 20X3, Carol Fortier was transferred by her employer to Vancouver from Toronto. She has made a number of financial transactions related to the move. Fortier has asked you for help in determining her 20X3 income for tax purposes. She has provided the following information:

1. Fortier is divorced and supports her two children Lise (age 17) and Randy (age 19). In the summer of 20X3, Randy earned net profits of $4,000 as a street vendor. Lise€™s only source of income was from an investment purchased for her by her mother. The investment, bonds of a Canadian public corporation, paid interest of $1,000 during the year.

2. Fortier began work in Vancouver in February 20X3, as a senior saleswoman for a clothing manufacturer. During 20X3, she received a gross salary of $110,000 as well as selling commissions of $5,000. In addition, on June 30, 20X3, her employer€™s year end, she was awarded a bonus of $12,000 payable in 12 monthly instalments of $1,000 beginning July 31, 20X3. During 20X3, she contributed $3,700 to the company€™s registered pension plan, and her employer contributed the same amount. She also paid $2,426 to the Canada Pension Plan and made Employment Insurance contributions of $914.

3. Fortier€™s employer has certified that she is required to pay some of her own expenses as part of her selling duties. In 20X3, she incurred the following costs:

In 20X3, Carol Fortier was transferred by her employer to

Fortier uses her car for business activities. At the end of 20X2, the car had an unamortized capital cost of $20,000 (original cost in 20X2, $22,000). In 20X3, she drove the car 30,000 kilometres, of which approximately 12,000 was for personal use. In 20X3, she acquired a computer (see table), which she uses at home to maintain customer files and industry information. She estimates that 90% of her 20X3 computer time was employment related.
4. On January 15, 20X4, Fortier contributed $7,000 to an RRSP. On the same date she contributed $4,000 to a TFSA. For the 20X2 taxation year, her earned income was $63,889. In 20X2, the combined (employer and employee) contribution to her employer RPP was $6,400.
5. Fortier drove herself and her two children from Toronto to Vancouver. The 4,400 km trip took five days. She paid $400 for gasoline, $480 for accommodation for four nights, and $500 for meals for five days. As well, she incurred the following relocation costs:

Real estate commission on sale of former home………………… $19,000

Moving furniture ………………………………………………… 14,000

Legal fees to purchase new home……………………………………… 2,000

Legal fees on sale of former home……………………………………… 2,500

Temporary lodging and meals, in Toronto after the sale

of the former home and in Vancouver before taking

possession of the new home (30 days) …………………………………… 6,000

……………………………………………………………………………… $43,500

Her employer, in accordance with company policy, paid her the maximum $10,000 as a partial reimbursement for transporting furniture to Vancouver.
6. Fortier wrote an article on selling strategies in the fashion industry. It was published in a national trade journal. The article received wide acclaim. In September 20X3, she was awarded a $2,000 prize for the best article of the year.
7. In January 20X3, Fortier sold her home in Toronto for $300,000. She had acquired the home in 20X0 for $180,000 and had occupied it until the move to Vancouver.
8. Five years ago, Fortier purchased 5% of the common shares of Prentice Ltd. for $20,000. Prentice is a Canadian-controlled private corporation manufacturing specialized furniture. In June 20X0, when the company had cash-flow problems, Fortier lent Prentice $10,000.The loan was unsecured and payable on demand. Although Fortier has received no interest to date, in 20X1 and 20X2, she included in her taxable income interest of $1,500 ($750 x 2 y = $1,500) based on the agreed 71„2% interest rate on each anniversary date. In 20X3, she demanded payment of the loan and accrued interest, but the company was unable to pay. The company€™s only assets, other than the leased manufacturing equipment, were inventory and receivables, which were pledged on a bank loan; these were insufficient to meet even that obligation. In March 20X4, Prentice closed operations and declared bankruptcy.
9. Fortier sold the following properties in 20X3:

The sale of the commodity futures contract was Fortier€™s second commodity transaction. In 20X1, she purchased and sold a similar contract but lost $14,000. She deducted the full $14,000 in computing her 20X1 taxable income.
10. Fortier owns a residential rental property in Toronto. She acquired the property in 20X2 for $414,000 (land $54,000, building $360,000). She incurred a substantial loss in 20X2 as a result of an unexpected vacancy. She found a new tenant in 20X3. She received gross rents of $46,000 in 20X3. Expenses for utilities, taxes, insurance, interest, and maintenance were $47,100 that year. One of the tenants failed to pay its December 20X3 rent of $2,000. However, she received that payment on January 20, 20X4.
11. Fortier received the following additional amounts in 20X3:

Eligible dividends from taxable Canadian public corporations… $6,000

Interest on bank deposits ……………………………………….. 7,000

Winnings from a provincial lottery …………………………… 800

12. Fortier hired an investment counsellor in 20X3. On his recommendation, she used $40,000 of the $200,000 mortgage loan on her new home to acquire Canadian public securities. Her mortgage interest payments in 20X3 totalled $22,000. She paid the investment counsellor $2,000 for his advice.
13. In 20X3, Fortier made donations to registered charities of $4,000.
14. During 20X3, Fortier's 20X1 tax return was reassessed. She hired a lawyer to prepare an appeal. The legal fee was $1,200.The appeal was not successful.

Required:
For the 20X3 taxation year, calculate Fortier€™s net income for tax purposes. Prepare the calculation in accordance with the net income formula, and organize the items of income by the categories described in that formula.