The following information pertains to Sewing Seamlessly, a tailoring and custom-made clothing business for 2022: Revenue $
Question:
The following information pertains to Sewing Seamlessly, a tailoring and custom-made clothing business for 2022:
Revenue $ 554,000
Operating expenses
Depreciation (note 1). 8,000
Fabric 171,000
Miscellaneous 3,000
Promotion (note 2) 20,000
Rent 25,000
Sewing supplies 12,000
Wages 90,000
Total. 329,000
Operating income 225,000
Other income:
Gain on sale of equipment (note 3) 1,000
Investment income (note 4) 10,200
Income before taxes $ 236,200
Notes:
1) CCA has been calculated correctly at $10,000.
2) Promotion includes $5,000 of donation to Dress for Success, a registered charity.
3) The sewing machines sold were originally purchased used from an estate sale for $1,500. They were sold for $2,000 this year after several years of use.
4) Investment income includes $1,200 of interest income and $9,000 of dividends.
Required (1)– Calculate business income for tax purposes, starting with income before taxes and adjusting.
Required (2)– Now assume that Sewing Seamlessly is a CCPC:
Sewing Seamlessly Co (SSC), that is associated with another company which already uses $350,000 of the small business deduction. / Calculate SSC’s net income for tax purposes, taxable income, and ordinary Part I tax. Assume that SSC is not eligible for the manufacturing and processing deduction.
Expert Answer:
Calculation of business income for tax purposes Income before taxes 236200 Adjustments Add back Depr... View the full answer
