Cranston Inc. is a CCPC with a December 31 year-end. The condensed Income Statement of Cranston Inc., prepared in accordance with generally accepted accounting principles, is as follows: 

• Revenues $926,000 

• Expenses (713,000) 

• Income before Taxes $213,000 

All of the corporations’ shares are privately held by one individual, Mr. Cranston, a resident of Canada for tax purposes. In addition, Cranston Inc. is not associated with any other company at any point during the year. 

Cranston Inc. provides the following information: 

1. Cranston Inc.’s expenses include amortization of $126,000. The company’s accountant has correctly calculated maximum CCA for the year to be $138,000

2. Cranston Inc.’s revenues include a gain on the sale of a depreciable asset of $27,000.The asset had a cost of $109,000, a net book value of $105,000 and was sold for proceeds of $132,000. This asset was not the last asset in its CCA class and the UCC balance in the class after recording the disposition was positive.

3. Revenues include dividends received from taxable Canadian corporations in the amount of $12,000.

4. Cranston Inc. has a net capital loss carry forward from two years ago of $22,500 ($45,000 x ½) and a non-capital loss carry forward of $126,000.

5. During the year, assume that Cranston Inc.’s Canadian active business income is equal to the company’s net business income for tax purposes.

6. Cranston Inc. has permanent establishments in Alberta, Saskatchewan, and the United States. The amount of revenues and salaries in these locations are as follows: 

• Alberta: $427,000 (GR), $162,000 (Salaries) 

• Sask.: $310,000 (GR), $87,000 (Salaries) 

• USA: $150,000 (GR), $26,000 (Salaries) 

The operations in the United States did not make a profit so, as a consequence, no foreign taxes were withheld (no foreign tax credit applicable).

7. Cranston inv. is not associated with any other corporation. the adjusted aggregate investment income for the corporation in the prior year was 15000. taxable capital employed in Canada for the corporation in the prior year was $75,000.

Calculate the net income for tax purposes and taxable income for Cranston Inc. for the current year. In addition, calculate the federal Part I tax payable for Cranston Inc. for the current year.

Answer rating: 100% (QA)

Net income for tax purposes 213000 Taxable income 160000 Show your calculations please CCA 138000 Ga... View the full answer