Assignment Problems

Assignment Problem Twelve - 9

(Corporate Tax Payable)

For the taxation year ending December 31, 2020, Lorne Inc., a Canadian controlled private com- pany, has Net Income For Tax Purposes of $340,500. This is made up of $312,400 of active business income and $28,100 of dividends from various Canadian public companies. It has been determined that $211,300 of the active business income qualifies as manufacturing and processing profits.

During 2020, the company makes donations to registered charities totaling $31,400.

At the beginning of 2020, the company has a non-capital loss carry forward of $29,300. It intends to deduct all of this carry forward during 2020.

lkorne Inc. is associated with three other CCPCs. The companies have agreed that each com- pany. will claim one-quarter of the annual business limit. The combined Taxable Capital Employed in Canada for the four associated companies is less than $10 million in both 2019 and 2020. The combined Adjusted Aggregate Investment Income of the four companies was $45,000 in 2019.

Required: Determine the minimum Taxable Income and Part | federal Tax Payable for Lorne Inc. for the year ending/Dcember 31, 2020. Show all calculations, whether or not they are nec- essary to the final solution. As the corporation operates in a province that has a reduced tax rate for M&P activity, a separate calculation of the federal M&P deduction is required.