Need Help for Part C & D

Taxable Income = $131,924.59

Other Income, Gains & Losses $ 376,340 The Class 14 balance relates to a franchise agreement which was signed on September 1, Income Before Tax Expense 661,025 2017 . The franchise agreement has a term of 8 years. The franchise Income Tax Expense fee, which was paid on the date the agreement was signed, was 32,574 Current 132,209 There were no further expenditures related to this franchise in the current year and Future : $ (198,308) the initial franchise fee was expensed in 2017 . Net Income 462,718 Detailed Information Regarding Above Income Statement Prior to 2019 , all laptops were leased. During the current year, laptops and 1 Colorfast spent 16,239 during the year on landscaping for its new building. computers were purchased for 50,071 For accounting purposes, this was treated as an asset. The Company will not amortize this balance as it believes the work as an unlimited life. In addition, on July 1, 2019 Colorfast purchased an Nissan GT-R Nismo for Curtis Chen (director & shareholder) costing $ 217,200 . Selling and Administrative costs include 5,661 in bad debt expense calculated based on a review of the aged receivables listing. 7 On June 6, 2019 , Colorfast Inc. acquired an unincorporated business. The purchase price included 55,421 for goodwill. At the end of the year, the goodwill was 3 Selling & Administrative costs include contributions to registered charities of 17,513 . tested for impairment and an impairment loss (for accounting purposes) was recorded in the amount of $ 13,855 (this is included in Other Income, Gains & Losses on the 4 Selling & Administrative costs includes the following: Income Statement above). . Insurance premiums on a life insurance policy for the president S 11,332 Note: the life insurance policy is required as collateral for a loan 8 Selling and administrative costs includes interest and late filing penalties for GST returns of legal fees paid to the corporation's lawyer to review a loan contract 4,736 406 Business meals and entertainment costs of 18,474 9 Other income, Gains & Losses includes an accounting gain on the sale of land owned by the 5 Selling and Administrative costs include compensation expense for management, Curtis and Constance corporation. The land was purchased several years ago and has been used as a storage lot who are also the owners of Colorfast Inc. Included in compensation expense (in addition to for Colorfast Inc. The land was originally purchased for 94,729 and was salary expense) are the following amounts: sold for proceeds of 368,113 . The purchaser will pay for the land using instalment Membership fee for a local golf and country club payments of 66,260 in 184,056 in 6,946 2019 , then Bonuses declared on Dec.31, 2021 . Traverse Led. would 2019 20,299 2020 and the remainder will be paid in * Note: The bonuses were paid on Mar.15 2020 like the maximum deferral on the taxable capital gain on the sale of this land. Automobile Allowances for business travel incurred S 10,207 * Note: The allowance was paid at the rate of 4.08 per business kilometer 10 According to the prior year's corporate tax return, Colorfast has the following RDTOH balances: Eligible Refundable Dividend Tax on Hand 7,443 (the Company received a dividend refund of 5 2,853 from the 6 On January 1, 2019 , the Company had the following UCC Balances: Eligible RDTOH in the prior year) 314,229 Non-eligible Refundable Dividend Tax on Hand $ 26,050 Class 1 - Building acquired in 2014 227,349 (the Company received a dividend refund of 9,986 from the Class 8 40,642 Non-Eligible RDTOH in the prior year) Class 10 Class 14 27,141 11 Also included in the Other Income, Gains & Losses balance recorded on the Income Statement There are no additions or dispositions of Class 1 assets during the year. are the following amounts: Eligible Dividends from the Company's portfolios of investments 17,295 (note: the above dividends were received from Taxable Canadian Corporations) There are dispositions of Class 8 assets during the year of 305,839 (Proceeds) Non-Eligible Dividends from a wholly-owned subsidiary 12,562 and acquisitions in the total amount of 147,790 . The Class 8 assets that (note: the wholly owned subsidiary received a dividend refund as a result of paying this were sold in the year had an original cost of 197,795 dividend of 3,769 ) 51,627 The Company has decided to lease of all its trucks and trailers in the future, therefore Canadian & Foreign Source Interest Income (note: the foreign source interest income included in the total above is S 21,683 ) all of the assets in Class 10 are sold during the year. The capital cost of these assets was 276,610 and the proceeds of disposition amounted to 149,080 The net book value of these assets was 113,753 and the resulting accounting 12 Colorfast Inc. has net capital loss carryover balance from 2014 of gain of 35,327 was included in Other Income and Expenses. S S 67,984 and a non-capital loss carryover balance from 2015 of 27,336 . Management has indicated that they would like to deduct as much of these amounts as possible in the current year.and calculate the dividend refund for the year. Be sure to show the calculation of the 13 The corporation has permanent establishments in Alberta, Ontario and closing Eligible & Non-eligible Refundable Dividend Tax on Hand (RDTOH) account balances the United States. Its gross revenues, salaries and wages, and operating profit in your submission. values are as follows: Location Gross Revenue Payroll Gross Profit Recommended Approach for this Case: In your groups, assign Part A (net income) and B (taxable income) Alberta ,048,784 95,148 270,654 to two group members and Parts C & D (Part I & Part IV tax and refundable taxes) to two group members. The Ontario 31,125 4,665 54,131 group members calculating taxes payable can start their calculations using a "placeholder" number in excel. U.S. 372,149 74,430 256,039 Then combine the group's responses into one document (or excel spreadsheet), replace any "placeholder" Totals 1,452,058 174,247 580,823 numbers with the actual calculated figures and review all calculations together. 14 Colorfast Inc. is associated with two other Canadian controlled private corporations. For each note to the Income Statement: compute the amount to be included in the computation of They have agreed to allow Colorfast to claim 236,464 of the total annual business net income, if any, then determine the appropriate ITA or income tax bulletin reference and list any limit. assumptions/provide an explanation, as required. If the figure is not used in the calculation of net income explain why it is excluded. 15 The foreign jurisdiction withheld tax of 38,406 from the US-source business income and 3,253 from the foreign non-business (interest) income. Assume that Show all of your work and clearly indicate the formulas used for all calculations. the foreign tax credits for business and non-business income are equal to the amounts withheld. 16 Colorfast Inc. paid the following dividends to it's shareholders, Curtis and Constance Chen, in the current year: Eligible Dividends 4,466 Non-Eligible Dividends 15,630 Required (Case A): Please prepare a response to each of the questions indicated below (Part A through D below) using the excel spreadsheet template. Be sure to show all of your work Include Income Tax Act references for each adjustment made in your calculations in PART A & PART B of the assignment only. Your submission, with all of your group member's names, must be submitted via the Blackboard Learn assignment #2 link PART A: Calculate the corporation's minimum net income for the year ended December 31, 2019 under the provisions of Division B of the Income Tax Act. Support your with calculations and the appropriate references to the Income Tax Act. Be sure to use the Section 3 format for the calculation of net income for tax purposes. Marks will only be received for income properly categorized by source. Colorfast Inc. has a policy of always taking maximum CCA deduction. Please show all of your work for the CCA calculations. Assume all expenses are reasonable in the circumstances, unless otherwise indicated above. PART B: Calculate the minimum taxable income for the company for the year ended, December 31, 2019 . Support your answer with calculations and provide the appropriate references to the Income Tax Act. Indicate the type and amount of any balances available for carry forward to subsequent years. PART C: Determine Colorfast Inc.'s Part | Tax Payable for the year ending December 31, 2019 and provide all explanations and assumptions you made, if any NOTE: Part I Tax Payable includes the following amounts: base amount of federal tax, general rate reduction, federal tax abatement, additional refundable tax (ART) on investment income, the small business deduction and foreign tax credits. PART D: Determine Colorfast Inc.'s Part IV Tax Payable for the year ending December 31, 2019