CASE STUDY #$1($addresses concepts found in Chapters $3,4,6,$ and $9)$

It is March of $2024,$ and you are about to prepare the $2023$ tax return for Jing Chen.

Your meeting with Jing has provided the following information:

Jing is thirty years old, divorced, and has a ten$-$year$-$old child from a former

marriage. Child support payments from Jing are $$500$ a month.

Jing lives in Saint John, and is a salesperson for Zeus Inc. The earnings from the

job include a base salary of $$6,000$ per month plus a commission of $1\%$ on the

sales Jing makes in the month, which were $$50,000$ every month in $2023.$

Jing moved to Saint John from Halifax on December $1,2022,$ due to a promotion

with Zeus. Jing's tax$-$deductible moving expenses totaled $$9,500,$ and there was

no reimbursement from Zeus. $$4,500$ of this expense was accurately claimed on

the $2022$ tax return. Jing took out a $$120,000$ mortgage to purchase a new home

in Saint John. The total interest payments were $$8,400$ in $2023.$

Jing's personal vehicle is used to perform the work duties, and Jing pays for the

expenses with no reimbursement from Zeus. However, an allowance of $$400$ is

received each month which is treated as unreasonable for tax purposes. Jing

purchased a new car in $2022$ which is used seventy$-$five percent of the time for

business purposes. The undepreciated capital cost of the vehicle at the beginning

of $2023$ was $$28,000.$ Total costs to operate the vehicle are $$800$ per month.

Interest expense on the car loan is $$200$ per month.

Jing spends $$300$ per month on fashionable clothing for work, and $$500$ per year

on a new cell phone. The cell phone bill is $$80$ per month, of which seventy$-$five

percent is for employment use.

Jing takes files home from the office at the end of the day and reviews the sales

calls in a home office. The files are then returned to the office at Zeus in the

morning prior to leaving for the day to make sales calls. Jing's monthly total

expense for the home insurance, property taxes, maintenance, and utilities are

$$1,000.$ The home office occupies ten percent of the square footage in the home.

Jing maximizes RRSP contributions each year. The $2022$ Notice of Assessment

showed RRSP room of $$12,000.$ Earned income was $$42,000$ in $2022$ which

consisted of $$6,000$ in commissions. Zeus does not have a registered pension

plan. CPP for enhanced contribution is $$631.$

Required:

A$.$ Calculate Jing's minimum net income for tax purposes for $2023.$ Use the

aggregating formula from Section $3$ of the Income Tax Act to show your

answer.

B$.$ Indicate why any items have been omitted from your calculations.

$($Work must be shown for marks to be awarded.$)$

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