In March of Year 1, Sally and Peter began to carry on business in partnership. Each contributed

Question:

In March of Year 1, Sally and Peter began to carry on business in Each contributed cash of $75,000 and agreed to share income and losses equally. The following information was provided for the first fiscal year of the The net income of $328,000 consisted of the following sources of income:
Business income……………………… $300,000
Eligible dividends ……………………… 20,000
Taxable capital gains……………………… 10,000
Allowable capital losses……………………… (2,000)
……………………………………………….. $328,000
b) In addition, the received a tax-free capital of $12,000 and donated $3,000 to registered charities.
c) Each partner took draws totalling $60,000.
Determine the adjusted cost base for the interest of each of the partners at January 1, Year 2. Income Tax Act reference: ITA 53(1)(e), 53(2)(c). Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Partnership
A legal form of business operation between two or more individuals who share management and profits. A Written agreement between two or more individuals who join as partners to form and carry on a for-profit business. Among other things, it states...