During the year ending December 31, 2018, Melanor Ltd. reported accounting Income Before Taxes of $225,000. This was followed in the year ending December 31, 2019, by an accounting Loss Before Taxes of $(372,000). Both of these amounts were determined using generally accepted accounting principles. Included in the above income figures were the following amounts:

2018 2019

Donations To Registered Charities $ 7,100 $ 9,600

Gains (Losses) On The Sale Of Shares $33,000 ( 17,000)

Dividends Received $23,000 37,000

The above accounting gains (losses) on the sale of shares are equal to the capital gains (losses) on the sale of the shares. The dividends received were from taxable Canadian corporations.

At the beginning of the 2018 taxation year, the Company has available a non-capital loss carry forward of $12,000 and a net capital loss carry forward of $10,000 [(1/2)($20,000)]. There has not been sufficient Net Income For Tax Purposes to deduct these amounts in any previous year. The Company would like to utilize these loss carryovers as soon as possible. Whenever the Company has an option, the Company would prefer to utilize non-capital losses first before net-capital losses.

Required: Calculate the minimum Net Income For Tax Purposes and Taxable Income for each of the two years 2018 and 2019 and indicate the amount and type of any carry overs that are available at the end of each year. Also calculate how any losses may be carried back to an earlier taxation year if available.

Place your final answers on the top as follows:

2018 Net income for tax purposes = $ Taxable income = $

Carryovers available at end of 2018 (type and amount):

2019 Net income for tax purposes = $ Taxable income = $

Carryovers available at end of 2019 (type and amount):

Answer rating: 100% (QA)

1Donation to Charities Company will get deduction of such amount therefore it ... View the full answer