The following tax information is extracted from Mrs. Hawkins' books and records:
Employment income (before effects of items below) $72,000
Interest income5,000
Capital gains (on securities)9,900
Deductible carrying charges1,000
The following balances are losses carried forward from December 31, 2010:
Non-capital loss arising - 2006 $24,000
2007 26,000
2010 28,000
Total non-capital losses$78,000
Net capital loss arising in 2011 $12,000
During the latter part of 2012, Mrs. Hawkins moved from Montreal to Toronto to commence working for Leaves Co. Ltd. She received a $100,000 housing loan from Leaves Co. Ltd., which she used to help purchase a house in Toronto. Mrs. Hawkins received the interest-free loan on October 1, 2012.
Mrs. Hawkins previously worked for Les Habitants Co. Ltee (a public company). Prior to leaving Les Habitants Co. Ltee on April 15, Mrs. Hawkins exercised the stock option that she held in Les Habitants Co. Ltee. Mrs. Hawkins was able to purchase 2,000 listed common shares of Les Habitants Co. Ltee for $4 per share (the fair market value of the shares at the time the option was granted). The shares were trading at $10 per share at the time she exercised her option to purchase the shares.
Assume that the prescribed interest rate for the last quarter of 2012 is 7%.
REQUIRED
Calculate Mrs. Hawkins' income and taxable income in 2012, in accordance with the ordering rules of Divisions B and C. Ignore any effects of the leap year.