Greyon Inc. operates an active business. Financial statements for the year ended December 31, 2021 report a net income before taxes of $300,000. The following additional information is provided:

1. Greyon’s net income is summarized as follows:

Income from business operations	$280,000
Gain on sale of capital assets	15,000
Interest on a bond investment	5,000
Income from Financial Statements	$300,000

2. During the year Greyon completed construction of a new warehouse building and its cost of $600,000 was added to the balance sheet. The cost consists of the following:

Building construction	$500,000
Heating and cooling systems	80,000
Landscaping of grounds	20,000
	$600,000

3. Greyon’s balance sheet includes an amount for goodwill acquired from a previous business acquisition. During the year, a goodwill impairment loss of $30,000 was deducted from the income from business operations.

4. Legal expenses deducted in arriving at income from business operations, include $2,000 for drafting the mortgage document for the new warehouse, $1,000 to investigate a zoning limitation on the new warehouse site, and $5,000 for the audit fee.

5. A management bonus of $60,000 was announced and accrued in September. The bonus was paid in two equal installments on January 31 and April 30 of the following year, 2021.

6. Advertising and promotion deducted in computing income from business operations, includes $20,000 for airing a TV commercial, $30,000 for production of the TV commercial, $5,000 for club memberships in a sports-related facility to enhance business contacts, and $12000 for acquiring a permanent mailing list for seeking new customers.

7. The income statement for the year ended December 31, 2021 includes the following items:

Amortization	$41,000
Charitable donations	6,000
Volume rebates and discounts on purchases	13000
Architect’s fee for design of new warehouse building	25000

8. Capital cost allowance has been correctly calculated as $58000.

Required:

1. Determine Greyon’s Business Income for tax purposes for the 2021.

2. Determine Greyon’s Net Income for Tax Purposes in accordance with the aggregating formula.

Answer rating: 100% (QA)

1 Business Income for tax purposes Income from business operations 280000 Gain on sale ... View the full answer