Assignment Problem One - 12

(Net Income For Tax Purposes - Two Cases)

The following two Cases make different assumptions with respect to the amounts of income and deductions for the current year for Christina Szabo, a Canadian resident.

Case A Christina had employment income of $46,200, as well as income from an unincorporated business of $13,500. A rental property owned by Christina experienced a net loss of $2,350. Dispositions of capital property during the current year had the following results:

Taxable Capital Gains $14,320

Allowable Capital Losses 23,460

Christina paid deductible spousal support of $4,800 during the current year. While gambling was an unusual pastime for Christina, a recent trip to Las Vega resulted in roulette winnings of $123,000. The expenses of the trip were $8,450.

Case B Christina had employment income of $64,000, interest income of $2,600, and net rental income of $4,560. Christina had a 50 percent interest in a partnership. During the current year the partnership had a business loss of $144,940. Dispositions of capital property during the current year had the following results:

Taxable Capital Gains $32,420

Allowable Capital Losses 29,375

Deductible contributions of $12,480 were made to Christinas RRSP.

Required: For both Cases, calculate Christinas Net Income For Tax Purposes (Division B income). Indicate the amount and type of any loss carry overs that would be available at the end of the current year.