As the new tax person at Vandelay Industries, a leading latex rubber manufacturer which has a December

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Question:

As the new “tax person” at Vandelay Industries, a leading latex rubber manufacturer which has a December 31 year-end, you have been asked to assist in the Income from Business calculations for the 2021 year, in particular how the following independent items would affect your reconciliation from accounting income to Income from Business for Income Tax purposes. The following items may be deducted from accounting income and some may remain in the reconciliation at the full amount or a reduced amount based on the Income Tax Act.

1. Finder’s fee to obtain a mortgage on the company’s buildings is $5,000

2. Bond interest payments of $5,000 received on March 1, 2021, and October 1, 2021, 10,000

3. As a result of great efforts by lead latex salesperson George Costanza, management bonuses totaling $70,000 were declared in October 2021 and will be paid in 2 amounts of $35,000 on February 28th, 2022, and August 31, 2022. 70,000

4. In 2021, in an effort to enhance the company’s social media presence, a 20-second video was prepared at a cost of $24,000 While posting the video on social media is free, Vandelay also paid $40,000 for commercial time on Sportsnet during Toronto Blue Jay games. 64,000

5. Depreciation/amortization expenses total $131,000 for the 2021 year 131,000

6. Donations to Canadian Registered Charities (not political parties) totaled $42,000 in 2021 42,000

7. Leaf regular season hockey tickets to entertain customers, no playoff tickets were purchased. 2,400

8. Cost of investigating a site for a new warehouse location, a bill in the amount of $6,000 was received in November 2021 and will be paid in January 2022. 6,000

Required:

Indicate how each of the above 8 independent items will affect Vandelay’s Income from Business reconciliation. Reference to sections of the Income Tax Act is not required, but your calculation must be supported with an explanation for the adjustments required or not required for each.