A. Income from property includes rental income, interest income, and dividend income. TRUE B. Banks will...

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A. Income from property includes rental income, interest income, and dividend income. TRUE B. Banks will always issue you a T5 Slip for interest income. FALSE. If your interest earned was less than $50.00, the bank will NOT issue you a T5 Slip for Interest Income, however it still must be reported on your tax return. C. Dividends are received from corporations. TRUE D. When calculating rental income, you can create a loss with CCA. FALSE. You cannot create a loss with CCA. E. 100% of a capital gain is included in income for tax purposes. FALSE. 50% of a capital gain is included in income for tax purposes. F. You cannot deduct personal and living expenses for tax purposes. TRUE G. Meals and entertainment are only 50% deductible for tax purposes. TRUE H. There is only 1 type of capital property. FALSE. There are two types of capital property: Depreciable and Non-Depreciable. 1. CCA stands for Capital Cost Allocations. TRUE J. The basis of valuation for inventory for tax purposes is Market or lower of cost or market. TRUE K. For spousal support, the recipient has an inclusion while payer has a deduction. TRUE QUESTION 1 The Azzurri Company has a December 31 accounting and taxation year end and for the year ending December 31, 2020, its GAAP determined income before taxes amounted to $2,229,000. You have been asked to calculate the Company's 2020 Net Income for Tax Purposes, and have been provided with the following additional information concerning the 2020 fiscal year: 1. 2. 3. 4. 5. The accountants deducted expenses for meals of $100,000 and tickets for various sporting events of $20,000. The total accounting amortization expense totaled $320,000. For tax purposes, the Company intends to deduct CCA of $80,000. Several of the companies' key employees got speeding tickets while they were making deliveries. The accountants deducted the full $2,000 for these tickets. The owner of company paid for basketball net for his children using the companies VISA, amounting to $400 (deducted for accounting purposes). During the summer, the Company spent $55,000 on landscaping costs. The $55,000 has not been deducted for accounting purposes. Accounting Income Before Taxes Additions (identified by item number) 1-Meals and Entertainment (50%) (($100,000 + $20,000) x 50%) 2-Accounting Amortization 3-Penalties and Fines Deductions (identified by item number) 2-CCA 4-Sporting (Basketball Net) Expense 5-Landscaping Costs. Net Income for Tax Purposes $60,000 $2,229,000 $320,000 $2,000 $382,000 -$80,000 -$400 -$55,000-$135,400 $2,475,600 QUESTION 2 Ms. Wood has 2019 earned income of $55,000. Her employer reports a Pension Adjustment of $6,500 on her 2019 T4. Her 2020 RRSP contributions total $7,000. At the end of 2019, her Unused RRSP Deduction Room was $8,500. The 2020 RRSP Dollar Limit is the lessor of $27,230 and 18% of the earned income. Calculate her unused RRSP deduction room at the end of year. Unused Deduction Room Carried Forward from 2019 $8,500 Lesser of: -2020 RRSP Dollar Limit = $$27,230 -18% of 2019 Earned Income of $55,000 = $9,900 $9,900 Less 2019 Pension Adjustment -$6,500 2020 RRSP Deduction Limit $11,900 RRSP Deduction -$7,000 Unused Deduction Room - End of 2020 $4,900 L. The TFSA account allows Canadian resident individuals (12+) to earn investment income on a tax-free basis. FALSE. The TFSA account allows Canadian resident individuals (18+) to earn investment income on a tax-free basis. M. The purpose of the RRSP account is to give an individual an incentive to save money for retirement. TRUE N. You can carry back a net capital loss 20 years. FALSE. You can carry back a net capital loss back up to 3 years. O. You can carry forward a non-capital loss 20 years. TRUE P. You can start claiming the Age Tax Credit once you turn 60 years old. FALSE. You can start claiming the Age Tax Credit once you turn 65 years old or older. Q. You can claim the First Time Home Buyer Credit on the purchase of a mobile home. TRUE. Assuming all requirements have been met. R. Dentures are a qualified medical expense for the Medical Expense Credit. TRUE S. You can claim the Charitable Donation Credit on donations made to United Nations and its agencies. TRUE. T. You can claim the Spouse or Common-law Partner Credit if you supported them during the year and their net income was more than the than your basic personal amount. FALSE. You can claim the Spouse or Common-law Partner Credit if you supported them during the year and their net income was less than the than your basic personal amount. U. The climate action incentive (CAI) payment consists of a basic amount and a 10% supplement for residents of small and rural communities. TRUE V. The division c deductions available to corporation are only dividends and charitable gifts. TRUE W. An Inter Vivos Trust is created while the settlor is alive. TRUE X. The filing deadline for an individual is always April 30th to file their tax return. FALSE. Not always. Due to the COVID-19 pandemic, it was extended later than that. Sometimes the CRA will change their policy. As well, some employers which count as individuals have until June 15 to file their taxes. Y. A trust is a relationship whereby a person (trustee) is bound to deal with property over which he/she has control (trust property) for the benefit of persons (beneficiaries) any of whom may enforce the obligation. TRUE QUESTION 3 Lorenzo Insigne owns a rental building, with the following information pertaining to the building rentals for the year 2020: Revenue from rentals: $250,000.00 Insurance for rental property: $5,000.00 Interest expense: $22,000.00 Property Taxes on rental property: $10,000.00 Property Taxes on Lorenzo's personal property: $25,000.00 Repairs and Maintenance: $30,000.00 CCA: $100,000.00 Determine Lorenzo's rental net income for the year: Gross Revenues Less Expenses: Rental Property Insurance $5,000.00 Interest Expense $22,000.00 Rental Property Taxes $10,000.00 $25,000.00 $250,000.00 Personal Property Taxes Repairs and Maintenance Net Income Before CCA CCA Claimed Net Income $30,000.00 $92,000 $158,000 -$100,000.00 $58,000.00 A. Income from property includes rental income, interest income, and dividend income. TRUE B. Banks will always issue you a T5 Slip for interest income. FALSE. If your interest earned was less than $50.00, the bank will NOT issue you a T5 Slip for Interest Income, however it still must be reported on your tax return. C. Dividends are received from corporations. TRUE D. When calculating rental income, you can create a loss with CCA. FALSE. You cannot create a loss with CCA. E. 100% of a capital gain is included in income for tax purposes. FALSE. 50% of a capital gain is included in income for tax purposes. F. You cannot deduct personal and living expenses for tax purposes. TRUE G. Meals and entertainment are only 50% deductible for tax purposes. TRUE H. There is only 1 type of capital property. FALSE. There are two types of capital property: Depreciable and Non-Depreciable. 1. CCA stands for Capital Cost Allocations. TRUE J. The basis of valuation for inventory for tax purposes is Market or lower of cost or market. TRUE K. For spousal support, the recipient has an inclusion while payer has a deduction. TRUE QUESTION 1 The Azzurri Company has a December 31 accounting and taxation year end and for the year ending December 31, 2020, its GAAP determined income before taxes amounted to $2,229,000. You have been asked to calculate the Company's 2020 Net Income for Tax Purposes, and have been provided with the following additional information concerning the 2020 fiscal year: 1. 2. 3. 4. 5. The accountants deducted expenses for meals of $100,000 and tickets for various sporting events of $20,000. The total accounting amortization expense totaled $320,000. For tax purposes, the Company intends to deduct CCA of $80,000. Several of the companies' key employees got speeding tickets while they were making deliveries. The accountants deducted the full $2,000 for these tickets. The owner of company paid for basketball net for his children using the companies VISA, amounting to $400 (deducted for accounting purposes). During the summer, the Company spent $55,000 on landscaping costs. The $55,000 has not been deducted for accounting purposes. Accounting Income Before Taxes Additions (identified by item number) 1-Meals and Entertainment (50%) (($100,000 + $20,000) x 50%) 2-Accounting Amortization 3-Penalties and Fines Deductions (identified by item number) 2-CCA 4-Sporting (Basketball Net) Expense 5-Landscaping Costs. Net Income for Tax Purposes $60,000 $2,229,000 $320,000 $2,000 $382,000 -$80,000 -$400 -$55,000-$135,400 $2,475,600 QUESTION 2 Ms. Wood has 2019 earned income of $55,000. Her employer reports a Pension Adjustment of $6,500 on her 2019 T4. Her 2020 RRSP contributions total $7,000. At the end of 2019, her Unused RRSP Deduction Room was $8,500. The 2020 RRSP Dollar Limit is the lessor of $27,230 and 18% of the earned income. Calculate her unused RRSP deduction room at the end of year. Unused Deduction Room Carried Forward from 2019 $8,500 Lesser of: -2020 RRSP Dollar Limit = $$27,230 -18% of 2019 Earned Income of $55,000 = $9,900 $9,900 Less 2019 Pension Adjustment -$6,500 2020 RRSP Deduction Limit $11,900 RRSP Deduction -$7,000 Unused Deduction Room - End of 2020 $4,900 L. The TFSA account allows Canadian resident individuals (12+) to earn investment income on a tax-free basis. FALSE. The TFSA account allows Canadian resident individuals (18+) to earn investment income on a tax-free basis. M. The purpose of the RRSP account is to give an individual an incentive to save money for retirement. TRUE N. You can carry back a net capital loss 20 years. FALSE. You can carry back a net capital loss back up to 3 years. O. You can carry forward a non-capital loss 20 years. TRUE P. You can start claiming the Age Tax Credit once you turn 60 years old. FALSE. You can start claiming the Age Tax Credit once you turn 65 years old or older. Q. You can claim the First Time Home Buyer Credit on the purchase of a mobile home. TRUE. Assuming all requirements have been met. R. Dentures are a qualified medical expense for the Medical Expense Credit. TRUE S. You can claim the Charitable Donation Credit on donations made to United Nations and its agencies. TRUE. T. You can claim the Spouse or Common-law Partner Credit if you supported them during the year and their net income was more than the than your basic personal amount. FALSE. You can claim the Spouse or Common-law Partner Credit if you supported them during the year and their net income was less than the than your basic personal amount. U. The climate action incentive (CAI) payment consists of a basic amount and a 10% supplement for residents of small and rural communities. TRUE V. The division c deductions available to corporation are only dividends and charitable gifts. TRUE W. An Inter Vivos Trust is created while the settlor is alive. TRUE X. The filing deadline for an individual is always April 30th to file their tax return. FALSE. Not always. Due to the COVID-19 pandemic, it was extended later than that. Sometimes the CRA will change their policy. As well, some employers which count as individuals have until June 15 to file their taxes. Y. A trust is a relationship whereby a person (trustee) is bound to deal with property over which he/she has control (trust property) for the benefit of persons (beneficiaries) any of whom may enforce the obligation. TRUE QUESTION 3 Lorenzo Insigne owns a rental building, with the following information pertaining to the building rentals for the year 2020: Revenue from rentals: $250,000.00 Insurance for rental property: $5,000.00 Interest expense: $22,000.00 Property Taxes on rental property: $10,000.00 Property Taxes on Lorenzo's personal property: $25,000.00 Repairs and Maintenance: $30,000.00 CCA: $100,000.00 Determine Lorenzo's rental net income for the year: Gross Revenues Less Expenses: Rental Property Insurance $5,000.00 Interest Expense $22,000.00 Rental Property Taxes $10,000.00 $25,000.00 $250,000.00 Personal Property Taxes Repairs and Maintenance Net Income Before CCA CCA Claimed Net Income $30,000.00 $92,000 $158,000 -$100,000.00 $58,000.00