Question: Sally earned $210,000 during 20x8. CPP and EI were deducted from her pay, totaling $3,609, and total income tax (federal and provincial) deducted was $70,000.
Sally earned $210,000 during 20x8. CPP and EI were deducted from her pay, totaling $3,609, and total income tax (federal and provincial) deducted was $70,000. She also received eligible dividends in the amount of $10,000. She sold shares in a public corporation during the year and recognized a capital gain of $500,000. Sally is married. Her husband earned $100,000 during the year. Required: A) Calculate Sally's taxable income and her federal tax liability before the deduction of any allowable non-refundable tax credits using 1) the normal method, and 2) the alternative minimum tax method. B) Which method would allow for a deduction of the dividend tax credit? C) Which method will Sally be required to use in 20x8, and why? How much is her federal tax liability? (Use tax rates and amounts applicable for 2019.)
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