A B C D E F G H K M N P Q R S T The Markee Company has a December 31 accounting and taxation year end and, for the year ending December 31, 2019, its GAAP determined income before taxes amounted to $1,264,000. You have been asked to calculate the Company's 2019 Net Income For Tax Purposes, and have been provided with the following additional information concerning the 2019 fiscal year: 3 4 1. Accounting amortization expense totalled $241,000. For tax purposes, the Company intends to deduct CCA of $281,000. 5 6 During December, the Company spent $36,000 on landscaping costs. These costs were capitalized in the Company's accounting records. As the expenditure was near the end of the year, no amortization was recorded. 8 13. Accounting expenses include $49,000 in business meals and entertainment. 9 10 4. The owner paid for a family trip to Cuba costing $5,500 through her business account. 1 1 12 5. The owner paid $300 parking ticket, for parking illegally. 13 14 15 The following points are relevant to the Net Income calculation: 16 17 Item 1 - The accounting amortization has to be added back and replaced with the CCA deduction. 18 19 Item 2 - Despite the fact that landscaping costs are usually capital costs, ITA 20(1)(aa) specifically permits their immediate deduction. 20 21 Item 3 - Only 50 percent of business meals and entertainment can be deducted. 2 3 Item 4 - You can not deduct personal expenses. 24 25 Item 5 - ITA 67.6, "Non-Deductibility Of Fines And Penalties" states that no deduction can be made for any fine or penalty imposed under a law of a country 26 27 28 Based on the preceding analysis, the calculation of 2019 Net Income For Tax Purposes would be as follows: 29 30 31 Accounting Income Before Taxes Addtions (identified by item number) 33 1 - Accounting Amortization 34 3 - Meals and entertainment 50% 35 4 - Personal 36 5 - Penalties and Fines 37 Deductions (identified by item number) 38 1 - CCA 39 2 - Landscaping Costs 10 Net Income For Tax PurposesMs. Simmons has 2019 net employment income of $40,000, 2019 net rental income of $11,000, and 2019 interest income of $6,000. She is not a member of an APP. She contributes $6,000 to her RRSP in October, 2020, $2,000 in November, 2020 and $900 in January, 2021. At the end of 2019, her Unused RRSP Deduction Room was nil. Unused Deduction Room Carried Forward from 2019 Lessor of: -2020 RRSP Dollar Limit = $27,230 9 -18% of 2019 Earned Income 10 2020 RRSP Deduction Limit 11 RRSP Deduction 12 Unused Deduction Room - End of 2020 13 14 15 16 17 18 Ms. Ball has 2019 net employment income of $46,000. Her employer reports a Pension Adjustment of $5,500 on 19 her 2019 T4. Her 2020 RRSP contributions total $4,200 . At the end of 2019, her Unused RRSP Deduction 20 Room was $3,500. 21 22 23 24 Unused Deduction Room Carried Forward from 2019 25 Lessor of: 26 -2020 RRSP Dollar Limit = $27,230 27 -18% of 2019 Earned Income 28 Less 2019 Pension Adjustment 29 2020 RRSP Deduction Limit 30 RRSP Deduction 31 Unused Deduction Room - End of 2020 32 33 34 35 38 Mr. Green receives taxable 2019 spousal support of $170,000 and has no other source of income during 2019. He is not a member 37 of an RPP. In January, 2021, he contributes $12,500 to his RRSP. This full amount is deducted in his 2020 tax return. His Unused RRSP Deduction Room carried forward from 2019 was $2,200. 39 40 41 42 43 Unused Deduction Room Carried Forward from 2019 44 Lessor of: 6-2020 RRSP Dollar Limit = $27,230 46 -18% of 2019 Earned Income 47 2019 RRSP Deduction Limit 48 RRSP Deduction 49 Unused Deduction Room - End of 2020 50Joel Embiid owns a rental buildings, with the following information pertaining to the building rentals for the year 2020: Rental Revenue $ 300,000.00 Interest expense $ 50,000.00 Property taxes $ 42,000.00 Repairs and maintenance $ 85,000.00 CCA $ 70,000.00 Determine Joels rental net income for the year: Gross Revenues Less Expenses: Interest Expense Propertry Taxes Repairs and maintenace Net Income before CCA CCA Claimed Cannot create a loss with CCA Net Income