George Pharmacy is a pharmaceutical salesman who has been very successful at his job in the...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
George Pharmacy is a pharmaceutical salesman who has been very successful at his job in the last few years. Unfortunately, his family life has not been very happy. Three years ago, his only child, Anna, was driving a car that was hit by a drunk driver. She and her husband were killed and their 14 year old son, Kevin, was blinded in the accident. He also suffered extensive inju- ries to his jaw that have required major and prolonged dental work. George and his wife, Valerie, adopted Kevin. Valerie quit her part-time job to care for him. She also cares for her mother, Joan Drugstore who lives with them. Joan suffers from dementia, Parkinson's and severe depression. The family doctor has signed a letter stating that she is dependent on George and Valerie because of her impairments. Joan does not meet the residency requirements necessary to qualify for Canadian Old Age Security payments. Valerie's parents separated two years ago in Scotland after her father, David Drugstore, suffered enormous losses in the stock market. They were forced to sell their home and David moved to Chile. David phones periodically to request that money be deposited in his on-line bank account. George's brother, Martin, completed an alcohol rehabilitation program after being fired for drinking on the job. He is also living with George and Valerie while he is enrolled as a full time student at Western University. George is paying his tuition and Martin has agreed to transfer any available education related amounts to George. Although Martin plans to file his 2018 tax return, he has not done so yet. Kevin is taking several undergraduate psychology courses at Western University. After hearing a talk given by an expert blind echolocator, i.e., one who uses sound to locate objects, his goal is to become a researcher at the Brain and Mind Institute and study the use of echolocation. Other information concerning George for 2018 is given on the following pages. Required: With the objective of minimizing George's Tax Payable, prepare the 2018 income tax return of George Pharmacy using the Profile tax software program assuming Valerie does not file a tax return. List any assumptions you have made, and any notes and tax planning issues you feel should be placed in the file. Ignore HST implications in your solution by assuming that George does not qualify for the GST/HST rebate. Personal Information Title First Name Last Name SIN Date of birth (Y/M/D) Marital Status Canadian citizen? Provide information to Elections Canada? Own foreign property of more than $100,000 Canadian? Taxpayer's Address 123 ZZZ Street, London, Ontario NOZ OZO Phone number (519) 111-1111 Taxpayer Mr. George Pharmacy 527-000-509 1954-07-02 Married Yes Yes No Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Donor Valerie Pharmacy 527-000-483 1953-12-30 $6,520 in CPP Valerie George Spouse Nil David Drugstore None 1934-01-12 T2202A (Martin) Tuition fees - for Martin Pharmacy (brother) Number of months in school - part-time Number of months in school - full-time T4 Issuer - Mega Pharma Inc. Employment income Father-In-Law T2202A (Kevin) Tuition fees for Kevin Number of months in school - part-time Number of months in school - full-time Employee's CPP contributions Employee's El premiums Income tax deducted Employment commissions Charitable donations Kevin Pharmacy 527-000-517 2002-10-17 Nil During September, David was arrested in Chile. Valerie had to spend three weeks in Chile and pay $2,000 in bribes before she could get him released from jail. George had to pay Nannies On Call $3,500 for in-home help to take care of Kevin while she was gone. Child Mothers Against Drunk Drivers (MADD) Canadian Institute For The Blind (CNIB) Brother Martin Pharmacy 527-000-533 1971-06-02 $8,300 Charitable Donation Receipts Box A B C Joan Drugstore None 1933-02-24 $500 Box A B C Mother-In-Law Box 14 16 18 22 42 46 Amount 8,000 0 8 Amount 3,600 8 0 Am't 1,000 3,000 Amount 378,000.00 2,593.80 858.22 114,000.00 82,000.00 400.00 During 2018, Mega reimbursed George $3,788 for meals and entertainment with clients, $2,268 for hotels and $4,925 for airline tickets. In addition to George's salary, he also earns commissions. His employer requires him to have an office in his home and has signed the form T2200 each year to this effect. On October 1, 2018, George purchased a new computer and software that will be used solely in his home office for employment related uses. The computer cost $3,600 and the various software programs cost $1,250. House Costs Area of home used for home office (square feet) Total area of home (square feet) Telephone line including high speed internet connection Hydro Insurance House Maintenance and repairs Mortgage interest Mortgage life insurance premiums Property taxes (Y/M/D) Patient Medical Expenses 2018-12-31 George Johnson Inc. Dr. Smith 2018-08-31 George 2018-09-19 George Optician 2018-11-07 Valerie Pharmacy 2018-06-07 Joan Dr. Wong Tropical Disease Centre 2018-03-22 David 2018-12-20 Martin 2018-10-01 Kevin Description Out of Canada insurance Dental fees Prescription glasses Prescription 650 5,000 620 3,200 4,000 3,800 6,200 400 6,700 Am't 731.00 155.40 109.00 66.84 Psychiatric counseling 2,050.00 Prescription 390.00 Dr. Walker Group therapy 6,000.00 Dr. Takarabe Orthodontics and Dental 30,000.00 George paid $800 for the care and feeding of Kevin's seeing eye dog, Isis, during 2018. George Pharmacy is a pharmaceutical salesman who has been very successful at his job in the last few years. Unfortunately, his family life has not been very happy. Three years ago, his only child, Anna, was driving a car that was hit by a drunk driver. She and her husband were killed and their 14 year old son, Kevin, was blinded in the accident. He also suffered extensive inju- ries to his jaw that have required major and prolonged dental work. George and his wife, Valerie, adopted Kevin. Valerie quit her part-time job to care for him. She also cares for her mother, Joan Drugstore who lives with them. Joan suffers from dementia, Parkinson's and severe depression. The family doctor has signed a letter stating that she is dependent on George and Valerie because of her impairments. Joan does not meet the residency requirements necessary to qualify for Canadian Old Age Security payments. Valerie's parents separated two years ago in Scotland after her father, David Drugstore, suffered enormous losses in the stock market. They were forced to sell their home and David moved to Chile. David phones periodically to request that money be deposited in his on-line bank account. George's brother, Martin, completed an alcohol rehabilitation program after being fired for drinking on the job. He is also living with George and Valerie while he is enrolled as a full time student at Western University. George is paying his tuition and Martin has agreed to transfer any available education related amounts to George. Although Martin plans to file his 2018 tax return, he has not done so yet. Kevin is taking several undergraduate psychology courses at Western University. After hearing a talk given by an expert blind echolocator, i.e., one who uses sound to locate objects, his goal is to become a researcher at the Brain and Mind Institute and study the use of echolocation. Other information concerning George for 2018 is given on the following pages. Required: With the objective of minimizing George's Tax Payable, prepare the 2018 income tax return of George Pharmacy using the Profile tax software program assuming Valerie does not file a tax return. List any assumptions you have made, and any notes and tax planning issues you feel should be placed in the file. Ignore HST implications in your solution by assuming that George does not qualify for the GST/HST rebate. Personal Information Title First Name Last Name SIN Date of birth (Y/M/D) Marital Status Canadian citizen? Provide information to Elections Canada? Own foreign property of more than $100,000 Canadian? Taxpayer's Address 123 ZZZ Street, London, Ontario NOZ OZO Phone number (519) 111-1111 Taxpayer Mr. George Pharmacy 527-000-509 1954-07-02 Married Yes Yes No Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Donor Valerie Pharmacy 527-000-483 1953-12-30 $6,520 in CPP Valerie George Spouse Nil David Drugstore None 1934-01-12 T2202A (Martin) Tuition fees - for Martin Pharmacy (brother) Number of months in school - part-time Number of months in school - full-time T4 Issuer - Mega Pharma Inc. Employment income Father-In-Law T2202A (Kevin) Tuition fees for Kevin Number of months in school - part-time Number of months in school - full-time Employee's CPP contributions Employee's El premiums Income tax deducted Employment commissions Charitable donations Kevin Pharmacy 527-000-517 2002-10-17 Nil During September, David was arrested in Chile. Valerie had to spend three weeks in Chile and pay $2,000 in bribes before she could get him released from jail. George had to pay Nannies On Call $3,500 for in-home help to take care of Kevin while she was gone. Child Mothers Against Drunk Drivers (MADD) Canadian Institute For The Blind (CNIB) Brother Martin Pharmacy 527-000-533 1971-06-02 $8,300 Charitable Donation Receipts Box A B C Joan Drugstore None 1933-02-24 $500 Box A B C Mother-In-Law Box 14 16 18 22 42 46 Amount 8,000 0 8 Amount 3,600 8 0 Am't 1,000 3,000 Amount 378,000.00 2,593.80 858.22 114,000.00 82,000.00 400.00 During 2018, Mega reimbursed George $3,788 for meals and entertainment with clients, $2,268 for hotels and $4,925 for airline tickets. In addition to George's salary, he also earns commissions. His employer requires him to have an office in his home and has signed the form T2200 each year to this effect. On October 1, 2018, George purchased a new computer and software that will be used solely in his home office for employment related uses. The computer cost $3,600 and the various software programs cost $1,250. House Costs Area of home used for home office (square feet) Total area of home (square feet) Telephone line including high speed internet connection Hydro Insurance House Maintenance and repairs Mortgage interest Mortgage life insurance premiums Property taxes (Y/M/D) Patient Medical Expenses 2018-12-31 George Johnson Inc. Dr. Smith 2018-08-31 George 2018-09-19 George Optician 2018-11-07 Valerie Pharmacy 2018-06-07 Joan Dr. Wong Tropical Disease Centre 2018-03-22 David 2018-12-20 Martin 2018-10-01 Kevin Description Out of Canada insurance Dental fees Prescription glasses Prescription 650 5,000 620 3,200 4,000 3,800 6,200 400 6,700 Am't 731.00 155.40 109.00 66.84 Psychiatric counseling 2,050.00 Prescription 390.00 Dr. Walker Group therapy 6,000.00 Dr. Takarabe Orthodontics and Dental 30,000.00 George paid $800 for the care and feeding of Kevin's seeing eye dog, Isis, during 2018. George Pharmacy is a pharmaceutical salesman who has been very successful at his job in the last few years. Unfortunately, his family life has not been very happy. Three years ago, his only child, Anna, was driving a car that was hit by a drunk driver. She and her husband were killed and their 14 year old son, Kevin, was blinded in the accident. He also suffered extensive inju- ries to his jaw that have required major and prolonged dental work. George and his wife, Valerie, adopted Kevin. Valerie quit her part-time job to care for him. She also cares for her mother, Joan Drugstore who lives with them. Joan suffers from dementia, Parkinson's and severe depression. The family doctor has signed a letter stating that she is dependent on George and Valerie because of her impairments. Joan does not meet the residency requirements necessary to qualify for Canadian Old Age Security payments. Valerie's parents separated two years ago in Scotland after her father, David Drugstore, suffered enormous losses in the stock market. They were forced to sell their home and David moved to Chile. David phones periodically to request that money be deposited in his on-line bank account. George's brother, Martin, completed an alcohol rehabilitation program after being fired for drinking on the job. He is also living with George and Valerie while he is enrolled as a full time student at Western University. George is paying his tuition and Martin has agreed to transfer any available education related amounts to George. Although Martin plans to file his 2018 tax return, he has not done so yet. Kevin is taking several undergraduate psychology courses at Western University. After hearing a talk given by an expert blind echolocator, i.e., one who uses sound to locate objects, his goal is to become a researcher at the Brain and Mind Institute and study the use of echolocation. Other information concerning George for 2018 is given on the following pages. Required: With the objective of minimizing George's Tax Payable, prepare the 2018 income tax return of George Pharmacy using the Profile tax software program assuming Valerie does not file a tax return. List any assumptions you have made, and any notes and tax planning issues you feel should be placed in the file. Ignore HST implications in your solution by assuming that George does not qualify for the GST/HST rebate. Personal Information Title First Name Last Name SIN Date of birth (Y/M/D) Marital Status Canadian citizen? Provide information to Elections Canada? Own foreign property of more than $100,000 Canadian? Taxpayer's Address 123 ZZZ Street, London, Ontario NOZ OZO Phone number (519) 111-1111 Taxpayer Mr. George Pharmacy 527-000-509 1954-07-02 Married Yes Yes No Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Donor Valerie Pharmacy 527-000-483 1953-12-30 $6,520 in CPP Valerie George Spouse Nil David Drugstore None 1934-01-12 T2202A (Martin) Tuition fees - for Martin Pharmacy (brother) Number of months in school - part-time Number of months in school - full-time T4 Issuer - Mega Pharma Inc. Employment income Father-In-Law T2202A (Kevin) Tuition fees for Kevin Number of months in school - part-time Number of months in school - full-time Employee's CPP contributions Employee's El premiums Income tax deducted Employment commissions Charitable donations Kevin Pharmacy 527-000-517 2002-10-17 Nil During September, David was arrested in Chile. Valerie had to spend three weeks in Chile and pay $2,000 in bribes before she could get him released from jail. George had to pay Nannies On Call $3,500 for in-home help to take care of Kevin while she was gone. Child Mothers Against Drunk Drivers (MADD) Canadian Institute For The Blind (CNIB) Brother Martin Pharmacy 527-000-533 1971-06-02 $8,300 Charitable Donation Receipts Box A B C Joan Drugstore None 1933-02-24 $500 Box A B C Mother-In-Law Box 14 16 18 22 42 46 Amount 8,000 0 8 Amount 3,600 8 0 Am't 1,000 3,000 Amount 378,000.00 2,593.80 858.22 114,000.00 82,000.00 400.00 During 2018, Mega reimbursed George $3,788 for meals and entertainment with clients, $2,268 for hotels and $4,925 for airline tickets. In addition to George's salary, he also earns commissions. His employer requires him to have an office in his home and has signed the form T2200 each year to this effect. On October 1, 2018, George purchased a new computer and software that will be used solely in his home office for employment related uses. The computer cost $3,600 and the various software programs cost $1,250. House Costs Area of home used for home office (square feet) Total area of home (square feet) Telephone line including high speed internet connection Hydro Insurance House Maintenance and repairs Mortgage interest Mortgage life insurance premiums Property taxes (Y/M/D) Patient Medical Expenses 2018-12-31 George Johnson Inc. Dr. Smith 2018-08-31 George 2018-09-19 George Optician 2018-11-07 Valerie Pharmacy 2018-06-07 Joan Dr. Wong Tropical Disease Centre 2018-03-22 David 2018-12-20 Martin 2018-10-01 Kevin Description Out of Canada insurance Dental fees Prescription glasses Prescription 650 5,000 620 3,200 4,000 3,800 6,200 400 6,700 Am't 731.00 155.40 109.00 66.84 Psychiatric counseling 2,050.00 Prescription 390.00 Dr. Walker Group therapy 6,000.00 Dr. Takarabe Orthodontics and Dental 30,000.00 George paid $800 for the care and feeding of Kevin's seeing eye dog, Isis, during 2018. George Pharmacy is a pharmaceutical salesman who has been very successful at his job in the last few years. Unfortunately, his family life has not been very happy. Three years ago, his only child, Anna, was driving a car that was hit by a drunk driver. She and her husband were killed and their 14 year old son, Kevin, was blinded in the accident. He also suffered extensive inju- ries to his jaw that have required major and prolonged dental work. George and his wife, Valerie, adopted Kevin. Valerie quit her part-time job to care for him. She also cares for her mother, Joan Drugstore who lives with them. Joan suffers from dementia, Parkinson's and severe depression. The family doctor has signed a letter stating that she is dependent on George and Valerie because of her impairments. Joan does not meet the residency requirements necessary to qualify for Canadian Old Age Security payments. Valerie's parents separated two years ago in Scotland after her father, David Drugstore, suffered enormous losses in the stock market. They were forced to sell their home and David moved to Chile. David phones periodically to request that money be deposited in his on-line bank account. George's brother, Martin, completed an alcohol rehabilitation program after being fired for drinking on the job. He is also living with George and Valerie while he is enrolled as a full time student at Western University. George is paying his tuition and Martin has agreed to transfer any available education related amounts to George. Although Martin plans to file his 2018 tax return, he has not done so yet. Kevin is taking several undergraduate psychology courses at Western University. After hearing a talk given by an expert blind echolocator, i.e., one who uses sound to locate objects, his goal is to become a researcher at the Brain and Mind Institute and study the use of echolocation. Other information concerning George for 2018 is given on the following pages. Required: With the objective of minimizing George's Tax Payable, prepare the 2018 income tax return of George Pharmacy using the Profile tax software program assuming Valerie does not file a tax return. List any assumptions you have made, and any notes and tax planning issues you feel should be placed in the file. Ignore HST implications in your solution by assuming that George does not qualify for the GST/HST rebate. Personal Information Title First Name Last Name SIN Date of birth (Y/M/D) Marital Status Canadian citizen? Provide information to Elections Canada? Own foreign property of more than $100,000 Canadian? Taxpayer's Address 123 ZZZ Street, London, Ontario NOZ OZO Phone number (519) 111-1111 Taxpayer Mr. George Pharmacy 527-000-509 1954-07-02 Married Yes Yes No Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Donor Valerie Pharmacy 527-000-483 1953-12-30 $6,520 in CPP Valerie George Spouse Nil David Drugstore None 1934-01-12 T2202A (Martin) Tuition fees - for Martin Pharmacy (brother) Number of months in school - part-time Number of months in school - full-time T4 Issuer - Mega Pharma Inc. Employment income Father-In-Law T2202A (Kevin) Tuition fees for Kevin Number of months in school - part-time Number of months in school - full-time Employee's CPP contributions Employee's El premiums Income tax deducted Employment commissions Charitable donations Kevin Pharmacy 527-000-517 2002-10-17 Nil During September, David was arrested in Chile. Valerie had to spend three weeks in Chile and pay $2,000 in bribes before she could get him released from jail. George had to pay Nannies On Call $3,500 for in-home help to take care of Kevin while she was gone. Child Mothers Against Drunk Drivers (MADD) Canadian Institute For The Blind (CNIB) Brother Martin Pharmacy 527-000-533 1971-06-02 $8,300 Charitable Donation Receipts Box A B C Joan Drugstore None 1933-02-24 $500 Box A B C Mother-In-Law Box 14 16 18 22 42 46 Amount 8,000 0 8 Amount 3,600 8 0 Am't 1,000 3,000 Amount 378,000.00 2,593.80 858.22 114,000.00 82,000.00 400.00 During 2018, Mega reimbursed George $3,788 for meals and entertainment with clients, $2,268 for hotels and $4,925 for airline tickets. In addition to George's salary, he also earns commissions. His employer requires him to have an office in his home and has signed the form T2200 each year to this effect. On October 1, 2018, George purchased a new computer and software that will be used solely in his home office for employment related uses. The computer cost $3,600 and the various software programs cost $1,250. House Costs Area of home used for home office (square feet) Total area of home (square feet) Telephone line including high speed internet connection Hydro Insurance House Maintenance and repairs Mortgage interest Mortgage life insurance premiums Property taxes (Y/M/D) Patient Medical Expenses 2018-12-31 George Johnson Inc. Dr. Smith 2018-08-31 George 2018-09-19 George Optician 2018-11-07 Valerie Pharmacy 2018-06-07 Joan Dr. Wong Tropical Disease Centre 2018-03-22 David 2018-12-20 Martin 2018-10-01 Kevin Description Out of Canada insurance Dental fees Prescription glasses Prescription 650 5,000 620 3,200 4,000 3,800 6,200 400 6,700 Am't 731.00 155.40 109.00 66.84 Psychiatric counseling 2,050.00 Prescription 390.00 Dr. Walker Group therapy 6,000.00 Dr. Takarabe Orthodontics and Dental 30,000.00 George paid $800 for the care and feeding of Kevin's seeing eye dog, Isis, during 2018. George Pharmacy is a pharmaceutical salesman who has been very successful at his job in the last few years. Unfortunately, his family life has not been very happy. Three years ago, his only child, Anna, was driving a car that was hit by a drunk driver. She and her husband were killed and their 14 year old son, Kevin, was blinded in the accident. He also suffered extensive inju- ries to his jaw that have required major and prolonged dental work. George and his wife, Valerie, adopted Kevin. Valerie quit her part-time job to care for him. She also cares for her mother, Joan Drugstore who lives with them. Joan suffers from dementia, Parkinson's and severe depression. The family doctor has signed a letter stating that she is dependent on George and Valerie because of her impairments. Joan does not meet the residency requirements necessary to qualify for Canadian Old Age Security payments. Valerie's parents separated two years ago in Scotland after her father, David Drugstore, suffered enormous losses in the stock market. They were forced to sell their home and David moved to Chile. David phones periodically to request that money be deposited in his on-line bank account. George's brother, Martin, completed an alcohol rehabilitation program after being fired for drinking on the job. He is also living with George and Valerie while he is enrolled as a full time student at Western University. George is paying his tuition and Martin has agreed to transfer any available education related amounts to George. Although Martin plans to file his 2018 tax return, he has not done so yet. Kevin is taking several undergraduate psychology courses at Western University. After hearing a talk given by an expert blind echolocator, i.e., one who uses sound to locate objects, his goal is to become a researcher at the Brain and Mind Institute and study the use of echolocation. Other information concerning George for 2018 is given on the following pages. Required: With the objective of minimizing George's Tax Payable, prepare the 2018 income tax return of George Pharmacy using the Profile tax software program assuming Valerie does not file a tax return. List any assumptions you have made, and any notes and tax planning issues you feel should be placed in the file. Ignore HST implications in your solution by assuming that George does not qualify for the GST/HST rebate. Personal Information Title First Name Last Name SIN Date of birth (Y/M/D) Marital Status Canadian citizen? Provide information to Elections Canada? Own foreign property of more than $100,000 Canadian? Taxpayer's Address 123 ZZZ Street, London, Ontario NOZ OZO Phone number (519) 111-1111 Taxpayer Mr. George Pharmacy 527-000-509 1954-07-02 Married Yes Yes No Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Donor Valerie Pharmacy 527-000-483 1953-12-30 $6,520 in CPP Valerie George Spouse Nil David Drugstore None 1934-01-12 T2202A (Martin) Tuition fees - for Martin Pharmacy (brother) Number of months in school - part-time Number of months in school - full-time T4 Issuer - Mega Pharma Inc. Employment income Father-In-Law T2202A (Kevin) Tuition fees for Kevin Number of months in school - part-time Number of months in school - full-time Employee's CPP contributions Employee's El premiums Income tax deducted Employment commissions Charitable donations Kevin Pharmacy 527-000-517 2002-10-17 Nil During September, David was arrested in Chile. Valerie had to spend three weeks in Chile and pay $2,000 in bribes before she could get him released from jail. George had to pay Nannies On Call $3,500 for in-home help to take care of Kevin while she was gone. Child Mothers Against Drunk Drivers (MADD) Canadian Institute For The Blind (CNIB) Brother Martin Pharmacy 527-000-533 1971-06-02 $8,300 Charitable Donation Receipts Box A B C Joan Drugstore None 1933-02-24 $500 Box A B C Mother-In-Law Box 14 16 18 22 42 46 Amount 8,000 0 8 Amount 3,600 8 0 Am't 1,000 3,000 Amount 378,000.00 2,593.80 858.22 114,000.00 82,000.00 400.00 During 2018, Mega reimbursed George $3,788 for meals and entertainment with clients, $2,268 for hotels and $4,925 for airline tickets. In addition to George's salary, he also earns commissions. His employer requires him to have an office in his home and has signed the form T2200 each year to this effect. On October 1, 2018, George purchased a new computer and software that will be used solely in his home office for employment related uses. The computer cost $3,600 and the various software programs cost $1,250. House Costs Area of home used for home office (square feet) Total area of home (square feet) Telephone line including high speed internet connection Hydro Insurance House Maintenance and repairs Mortgage interest Mortgage life insurance premiums Property taxes (Y/M/D) Patient Medical Expenses 2018-12-31 George Johnson Inc. Dr. Smith 2018-08-31 George 2018-09-19 George Optician 2018-11-07 Valerie Pharmacy 2018-06-07 Joan Dr. Wong Tropical Disease Centre 2018-03-22 David 2018-12-20 Martin 2018-10-01 Kevin Description Out of Canada insurance Dental fees Prescription glasses Prescription 650 5,000 620 3,200 4,000 3,800 6,200 400 6,700 Am't 731.00 155.40 109.00 66.84 Psychiatric counseling 2,050.00 Prescription 390.00 Dr. Walker Group therapy 6,000.00 Dr. Takarabe Orthodontics and Dental 30,000.00 George paid $800 for the care and feeding of Kevin's seeing eye dog, Isis, during 2018. George Pharmacy is a pharmaceutical salesman who has been very successful at his job in the last few years. Unfortunately, his family life has not been very happy. Three years ago, his only child, Anna, was driving a car that was hit by a drunk driver. She and her husband were killed and their 14 year old son, Kevin, was blinded in the accident. He also suffered extensive inju- ries to his jaw that have required major and prolonged dental work. George and his wife, Valerie, adopted Kevin. Valerie quit her part-time job to care for him. She also cares for her mother, Joan Drugstore who lives with them. Joan suffers from dementia, Parkinson's and severe depression. The family doctor has signed a letter stating that she is dependent on George and Valerie because of her impairments. Joan does not meet the residency requirements necessary to qualify for Canadian Old Age Security payments. Valerie's parents separated two years ago in Scotland after her father, David Drugstore, suffered enormous losses in the stock market. They were forced to sell their home and David moved to Chile. David phones periodically to request that money be deposited in his on-line bank account. George's brother, Martin, completed an alcohol rehabilitation program after being fired for drinking on the job. He is also living with George and Valerie while he is enrolled as a full time student at Western University. George is paying his tuition and Martin has agreed to transfer any available education related amounts to George. Although Martin plans to file his 2018 tax return, he has not done so yet. Kevin is taking several undergraduate psychology courses at Western University. After hearing a talk given by an expert blind echolocator, i.e., one who uses sound to locate objects, his goal is to become a researcher at the Brain and Mind Institute and study the use of echolocation. Other information concerning George for 2018 is given on the following pages. Required: With the objective of minimizing George's Tax Payable, prepare the 2018 income tax return of George Pharmacy using the Profile tax software program assuming Valerie does not file a tax return. List any assumptions you have made, and any notes and tax planning issues you feel should be placed in the file. Ignore HST implications in your solution by assuming that George does not qualify for the GST/HST rebate. Personal Information Title First Name Last Name SIN Date of birth (Y/M/D) Marital Status Canadian citizen? Provide information to Elections Canada? Own foreign property of more than $100,000 Canadian? Taxpayer's Address 123 ZZZ Street, London, Ontario NOZ OZO Phone number (519) 111-1111 Taxpayer Mr. George Pharmacy 527-000-509 1954-07-02 Married Yes Yes No Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Family Members First Name Last Name SIN Date of birth (Y/M/D) Net income Donor Valerie Pharmacy 527-000-483 1953-12-30 $6,520 in CPP Valerie George Spouse Nil David Drugstore None 1934-01-12 T2202A (Martin) Tuition fees - for Martin Pharmacy (brother) Number of months in school - part-time Number of months in school - full-time T4 Issuer - Mega Pharma Inc. Employment income Father-In-Law T2202A (Kevin) Tuition fees for Kevin Number of months in school - part-time Number of months in school - full-time Employee's CPP contributions Employee's El premiums Income tax deducted Employment commissions Charitable donations Kevin Pharmacy 527-000-517 2002-10-17 Nil During September, David was arrested in Chile. Valerie had to spend three weeks in Chile and pay $2,000 in bribes before she could get him released from jail. George had to pay Nannies On Call $3,500 for in-home help to take care of Kevin while she was gone. Child Mothers Against Drunk Drivers (MADD) Canadian Institute For The Blind (CNIB) Brother Martin Pharmacy 527-000-533 1971-06-02 $8,300 Charitable Donation Receipts Box A B C Joan Drugstore None 1933-02-24 $500 Box A B C Mother-In-Law Box 14 16 18 22 42 46 Amount 8,000 0 8 Amount 3,600 8 0 Am't 1,000 3,000 Amount 378,000.00 2,593.80 858.22 114,000.00 82,000.00 400.00 During 2018, Mega reimbursed George $3,788 for meals and entertainment with clients, $2,268 for hotels and $4,925 for airline tickets. In addition to George's salary, he also earns commissions. His employer requires him to have an office in his home and has signed the form T2200 each year to this effect. On October 1, 2018, George purchased a new computer and software that will be used solely in his home office for employment related uses. The computer cost $3,600 and the various software programs cost $1,250. House Costs Area of home used for home office (square feet) Total area of home (square feet) Telephone line including high speed internet connection Hydro Insurance House Maintenance and repairs Mortgage interest Mortgage life insurance premiums Property taxes (Y/M/D) Patient Medical Expenses 2018-12-31 George Johnson Inc. Dr. Smith 2018-08-31 George 2018-09-19 George Optician 2018-11-07 Valerie Pharmacy 2018-06-07 Joan Dr. Wong Tropical Disease Centre 2018-03-22 David 2018-12-20 Martin 2018-10-01 Kevin Description Out of Canada insurance Dental fees Prescription glasses Prescription 650 5,000 620 3,200 4,000 3,800 6,200 400 6,700 Am't 731.00 155.40 109.00 66.84 Psychiatric counseling 2,050.00 Prescription 390.00 Dr. Walker Group therapy 6,000.00 Dr. Takarabe Orthodontics and Dental 30,000.00 George paid $800 for the care and feeding of Kevin's seeing eye dog, Isis, during 2018.
Expert Answer:
Answer rating: 100% (QA)
SOLUTION Based on the information provided here is the 2018 income tax return for George Pharmacy using the Profile tax software program Personal Information Name George Pharmacy SIN 527000509 Address ... View the full answer
Related Book For
Intermediate Accounting
ISBN: 978-0324592375
17th Edition
Authors: James D. Stice, Earl K. Stice, Fred Skousen
Posted Date:
Students also viewed these accounting questions
-
Chile has been very successful at liberalizing its international capital markets. Suppose you worked for a New York-based company that was considering a large investment in Chile. Explain whether...
-
The Olsen Mining Company has been very successful in the last five years. Its $1,000 par value convertible bonds have a conversion ratio of 32. The bonds have a quoted interest rate of 7 percent a...
-
Luther, 72, is a lifelong bachelor who has been very successful in his business and investment endeavors. He realizes that he should begin to do some tax planning for his death. Although he intends...
-
Colt Division had the following results for the year just ended: Sales..................................$750,000 Contribution margin ..................300,000 Controllable...
-
A jewelry manufacturer has determined the expense equation for necklaces to be E = 1,250q + 800,000, where q is the quantity demanded. At a particular price, the breakeven revenue is $2,600,000. a....
-
In this exercise, we work with a discrete problem and show why the relationship is analogous to b. Simplify the sum in part (a) and show that it is equal to f(b) - f(a). c. Explain the correspondence...
-
You are the global sales manager for a consumer food products company that is getting ready to roll out a new product. As part of the introduction your global sales force is being asked to do a...
-
On December 31, 2010, Hawthorne Corporation issued for $155,989, five-year bonds with a face amount of $150,000 and a stated (or coupon) rate of 9 percent. The bonds pay interest annually and have an...
-
On March 1, ABC Holdings purchased land and three buildings for $1,200,000. The plan was to use "Building 1" as an office and to demolish "Building 2" and "Building 3" to make room for a parking lot....
-
A highway department is studying the relationship between traffic flow and speed during rush hour on Highway 193. The data in the file TrafficFlow were collected on Highway 193 during 100 recent rush...
-
An organization that tries to encourage the flow of investment to poor countries is the a. World Bank. b. Organization of Less Developed Countries. c. Alliance of Developing Countries. d....
-
A computer in a soft real - time system has instructions that require two bus cycles, one to fetch the instruction and another to fetch the data. Each bus cycle takes 250 ns and each instruction...
-
The person in a bailment relationship who transfers possession of goods to another. a. bailee b. bailment c. bailor d. carriers lie n e. common c arrier f. consignee g. consignor h. constructive ba...
-
Is it fair to fans when teams create a bundle of more popular games and less popular games that must be purchased together?
-
Recalculate the FP (function point) metric for the inertial measurement system using a set of weightings that assumes that significant off - the - shelf software (say 70%) is to be used. Make...
-
Repeat Problem 8.6-1, using a proportional-plus-derivative filter. Problem 8.6-1 Consider the system of Problem 8.4-1. (a) Design a unity-dc-gain phase-lead compensator that yields a phase margin of...
-
(Related to Checkpoint 7.2) (Calculating the geometric and arithmetic average rate of return) Marsh Inc. had the following end-of-year stock prices over the last five years and paid no cash...
-
The liquidliquid extractor in Figure 8.1 operates at 100F and a nominal pressure of 15 psia. For the feed and solvent flows shown, determine the number of equilibrium stages to extract 99.5% of the...
-
The income statement for Fignon Co. for the year ended December 31, 2011, reported the following. Income from continuing operations before income taxes . . . . . . . . . . . . . . . . . . . . . . . ....
-
Cammo Company sold receivables (without recourse) for $53,000. Cammo received $50,000 cash immediately from the factor (the company to whom the receivables were sold). The remaining $3,000 will be...
-
a. List several examples of changes in accounting principle that a company may make. b. Explain briefly the proper accounting treatment for recognizing currently a change in accounting principle.
-
Which of the following is not a reason that the prevention and detection of fraud resulting from management override and collusion presents a significant challenge for the antifraud community? 1....
-
Which of the following statements best describes corporate governance with respect to fraud? 1. Auditors are primarily responsible for the detection of fraud, the Board of Directors for the...
-
Which of the following is not an inherent part of Statement on Auditing Standards, No. 99/113? 1. Greater scrutiny of the chief executive and chief financial officers personal financial condition 2....
Study smarter with the SolutionInn App