Operating income $($Note $1)$ $ $312,000$

Profit on the sale of excess land $($Note $2)50,000$

Royalty income $($Note $3)5,000$

Retailing income $205,000$

Interest on o$/$s accounts receivable in retailing business $9,500$

Recapture of CCA $($Note $4)30,500$

Advertising agency loss $(25,500)$

Foreign Business income in Canada $($Note $8)35,000$

Rental income $($Note $5)7,500$

Taxable capital gains $($Note $6)($from active assets$)43,000$

Allowable cap losses$-$sale of depreciable machinery$($note $10)(10,000)$

Interest income from five$-$year bonds $9,000$

Dividend from Wholly owned sudsidiary $($Note $9)($non$-$eligible$)11,000$

Dividend from from taxable Can corp ownership$)($eligible$)12,000$

Foreign non$-$business income in Cdn$.$ $ $($Note $7)17,000$

Division B net income for tax purposes $ $711,000$

$(1)$ The corporation has permanent establishments in Ontario and New York in the United States. Its gross revenue and salary and wages information is as follows: Ontario New York US Gross revenue $$10,325,000$ $$3,675,000$ Salaries and wages $5,375,000993,000$

$(2)$ The land had been held for approximately $10$ years. It had been held vacant so that the plant can expand in the future. Plans changed when an unsocilated offer was made by a supplier to buy the land on June $10,2024.$

$(3)$ The royalty income had been determined to be property income.

$(4)$ The recapture resulted from the sale of some fixtures used in the retailing business.

$(5)$ The rental income was derived from leasing the entire space on a five$-$year lease in an unused warehouse. Assignment $2$ Taxation Summer $2025$ SCS $0975$

$(6)$ The net taxable capital gains resulted from the sale, on January $15,2024,$ of marketable securities purchased with short$-$term surplus funds in the manufacturing operation.

$(7)$ Withholding tax on the pre$-$tax non business income of $$17,000$ was Can $$3,000$

$(8)$ Foreign income tax on the pre$-$tax foreign busniess of $$44,700$ earned through an unincorporated branch in the United States was paid in Can dollars $$9,700$

$(9)$ The wholly owned subsidiary received a Dividend refund of $$3,000$ as a result of paying out the dividend

$(10)$ Allowable capital losses was from the sale of depreciable old machinery use by the company for producing sales on March $15,2024$

$($a$)$ STAR Ltd$.$ made the following selected payment during the year: Charitable donations $$12,500$

$($b$)$ Four quarterly dividends $($non$-$eligible$)$ of $$45,000$ were declared at the end of each calendar quarter of $2024$ and paid within two weeks of their declaration. The last quarter of $2024$ was paid in January $2025$ and a dividend of $$30,000$ declared in the last quarter of $2023$ was paid in January $2024.$

$($c$)$ STAR Ltd$.$ had allocated $$50,000$ of its $$500,000$ business limit to other associated corps, taxable capital $27\mathrm{.}5$ mill

$($d$)$ The balance in the tax accounts on January $1,2024$ were: Charitable donation carryforward $ $17,500$ Unused business foreign tax credit $14,000$ Non$-$capital losses from $201251,500$ Net capital losses from $201314,500$ Refundable dividend tax on hand $21,000$ Dividend refund for $2023$