1.Eve Inc. is a taxable Canadian corporation. In 2021, the company contributed $ 100,000 to a registered charity. In 2020, the company was unable to deduct $ 83,000 of similar donations. In 2021, the income of the corporation for tax purposes consisted of $ 120,000 of active business income and $ 120,000 of property income before any deduction for charitable donations.

Required:

The maximum allowable charitable donation deduction for Eve Inc. in 2021 is:

1. $ 240,000
2. $ 183,000
3. $ 180,000
4. $ 83,000
5. None of the above

2. The following data summarizes the operations of Kopy Kat Inc. for the year ended Dec. 31, 2021;

Loss from an active business $ (20,000)

Dividend income from taxable Canadian corporations 18,500

Taxable capital gains 8,250

Allowable capital losses (5,375)

Donations paid to registered charities 3,500

The corporation had the following carry forward balances at the end of December 31, 2020:

Donations made in 2018 to registered charities $ 2,050

Net capital losses which arose in 2004 6,000

Required:

The companys non-capital loss for income tax purposes for 2021 is:

a) $ 18,500

b) $ 20,000

c) $ 23,500

d) $ 5,000

e)None of the above

3. From which of the following accounts could dividends be paid from income taxed only at the highest corporate income tax rate?

Answer:

a) LRIP

b) GRIA

c) CDA

d) GRIP

e) none of the above

4. Linda, a resident of Canada, owns 100 % of the common shares of both Windsor Retail Ltd. (WRL) and Yellowknife Klosets Ltd. (YKL). Both corporations have a September 30 year- end.

YKL had BOTH active business income AND taxable income of $ 44,000 for its 2021

taxation year. Barbara has decided to allocate to YKL as much of the small business

limit as is needed to maximize the small business deduction for YKL, with the

remaining balance of the available annual business limit allocation being made to

WRL.

Most but not all of WRL s income is from an active business carried on in Canada.

The following information pertains to WRL for its 2021 taxation year:

Division B net income for tax purposes $ 220,000 Net taxable capital gains 16,000 Charitable donation contributions 10,000

Recapture of CCA on sale of operating business assets 10,000

Required:

The small business deduction for WRL for 2019 should be:

1. $ 41,800
2. $ 39,900
3. $ 30,400
4. $ 36,860
5. None of the above

5. (2 marks)

Robin Ltd. is a corporation whose business is providing accounting services for a fee to Faith Ltd., a large, privately owned, arms length corporation. Shari and David are each 50% shareholders of Bobin Lrd. and the only employees of Robin Ltd. Prior to the incorporation of Robin Ltd., both Shari and David were employed by Faith Ltd. in the accounting department.

Required:

What type of income is Robin Ltd. earning for tax purposes?

1. Active business income
2. Personal property income
3. Specified investment business income
4. Personal services business income
5. None of the above

6. Jonathan owns 60% of Carweb.com Ltd., 70% of Taxman Inc. and 51% of Internet Housefind Ltd. The remaining shareholders in all three corporations are unrelated parties. Each of the three companies earns at least $ 500,000 of active business income. Required:

What is the maximum amount of combined corporate business income that the three companies can claim on their corporation income tax returns, based on only the above information?

1. $ 1,000,000
2. $ - 0 -
3. $ 500,000
4. $ 1,500,000
5. None of the above