A Revlew of Net Income for Tax Purposes Alan Active holds a job. operates a small farm, and makes numerous investments. A description of his financial activities for 2020 is given below. 1. Alan is a lawyer and is employed in the legal department of a large public corporation. He received a gross salary of $ 79.000. In addition, the corporation provided the following items of remuneration: A car allowance of $500 a month to cover costs of travel in the performance of his duties: during 2020, Alan used his own car to travel from his home to work and back and rarely used it during working hours on company business. A contribution of $3,000 to a deferred profit-sharing plan. A group term life insurance policy for $100.000 (premium cost $1.000). A cash bonus of $3,600 that was awarded to him in the previous year and that he received in the current year. 2. Alan's employer gives all senior executives the option to acquire a certain number of shares of the corporation at a price that is guaranteed for two years. In 2019, the employer granted Alan an option to purchase up to 5.000 of its shares for a price of $10 per share. At the time the option was granted, the shares were valued at $10.75 per share. During 2020, Alan purchased 600 shares at a cost of $10 per share. At the date of purchase the corporation's shares were trading at $14 per share. 3. Alan purchased a small parcel of land (20 hectares) in 2020 and began raising goats. In 2020. he lost $1.000 from this operation. 4. 5. In 2020, Alan purchased 1.000 shares of Canadian public corporation X for $20 per share and received a stock dividend of 100 additional shares of the same class. During the year, he sold the 100 shares at $22 per share, for the same value as on their date of issue. Three years ago. Alan purchased three residential rental properties and has provided you with the following information: Property 1 Property 2 Property 3 $10,000 $ 4,000 $ 8.000 Building cost 60.000 40,000 45.000 Building UCC (December 31, 2019) 52.000 37,000 40,000 2020 net rents (before CCA) 3.000 (5.000) 4,000 Land cost In 2020, Alan sold property 1 for $80.000 (land $12,000, building $68,000), and property 2 for $50.000 (and $6,000, building $44.000). Also, in 2020, he purchased property 4 for $90,000 (land $30.000, building $60,000). In 2020. property 4 had net rentals before capital cost allowance of $1.000. During the year, Alan gifted 1,000 shares of Shell Canada Ltd. (a public corporation) to his daughter. The shares had cost him $10 each and had a value at the time of the gift of $13 each. In 2020, his daughter (15 years old) received dividends of $2,000: she then sold the shares for $30 each 6. 7. In 2020. Alan gifted 2,000 shares of Exxon Ltd. (a public corporation) to his spouse. The shares had a value of $40 each at the time of the gift. He had paid $30 per share several years before. His spouse sold the shares in 2020 for $26 per share during a market slump. Alan's mother died in 2019 and left him her house. The house cost $40.000 at the time of purchase and had a value in 2019 of $60,000. Alan sold the house in 2020 for $66,000. 8. 9. Three years ago. Alan purchased 15% of the shares of two private corporations. Each carried on an active business. He sold the shares of both corporations in 2020. Information relating to the shares is as follows: Cost Proceeds of sale Terms of payment PC1 $42,000 56.000 $8,000/yr for 7 yrs PC2 $33,000 20,000 All cash 10. In 2020, during a market slump. Alan sold 500 shares of public corporation A for $30,000; the shares had cost him $40.000. Two weeks later. as the market began to strengthen, he purchased 500 shares of the same corporation for $29.000. 11. Alan also sold the following assets in 2020: Public corporation B shares Public corporation C shares Stamp collection Jewellery Boat Stereo set Cost $10.000 47,500 8,000. 6,000. 5,000. 600. Proceeds $12,200. 18,000 11.800. 1.000. 2.000. 800. 12. Alan had the following additional receipts in 2020: Dividends from Canadian public companies Interest on bonds Lottery winnings $4,500. 2.000. 6,000 $1,900 4.000. 13. Alan paid out the following in 2020: To purchase a computer for use at home when working on his employer's business Interest on bank loan to purchase shares of public corporation Interest on house mortgage (mortgage funds of $60,000 were used -$38,000 for the purchase of the house, $22.000. for the purchase of shares) Lump-sum alimony settlement to ex-spouse Tuition fees for attending university Donations Gift to a registered federal political party Contribution to an RRSP Annual dues to the provincial law society 6,000 9.000 1.000 4,000 1.000 2.700 1,200 Required: Calculate Alan's net income for tax purposes for 2020. (Enter deductions with a minus sign (-). If a number should be zero, enter 0.) A Employment income Employment Income Subtotal Property income Property Income Subtotal B Taxable Capital Gains and Allowable Capital Losses Total Capital Gains Total Capital losses Segment B subtotal Allowed LPP and PUP - Gains and losses Subtotal LPP and PUP transactions LPP & PUP amount allowed C Other deductions D Segment D Subtotal Net Income for Tax purposes A Revlew of Net Income for Tax Purposes Alan Active holds a job. operates a small farm, and makes numerous investments. A description of his financial activities for 2020 is given below. 1. Alan is a lawyer and is employed in the legal department of a large public corporation. He received a gross salary of $ 79.000. In addition, the corporation provided the following items of remuneration: A car allowance of $500 a month to cover costs of travel in the performance of his duties: during 2020, Alan used his own car to travel from his home to work and back and rarely used it during working hours on company business. A contribution of $3,000 to a deferred profit-sharing plan. A group term life insurance policy for $100.000 (premium cost $1.000). A cash bonus of $3,600 that was awarded to him in the previous year and that he received in the current year. 2. Alan's employer gives all senior executives the option to acquire a certain number of shares of the corporation at a price that is guaranteed for two years. In 2019, the employer granted Alan an option to purchase up to 5.000 of its shares for a price of $10 per share. At the time the option was granted, the shares were valued at $10.75 per share. During 2020, Alan purchased 600 shares at a cost of $10 per share. At the date of purchase the corporation's shares were trading at $14 per share. 3. Alan purchased a small parcel of land (20 hectares) in 2020 and began raising goats. In 2020. he lost $1.000 from this operation. 4. 5. In 2020, Alan purchased 1.000 shares of Canadian public corporation X for $20 per share and received a stock dividend of 100 additional shares of the same class. During the year, he sold the 100 shares at $22 per share, for the same value as on their date of issue. Three years ago. Alan purchased three residential rental properties and has provided you with the following information: Property 1 Property 2 Property 3 $10,000 $ 4,000 $ 8.000 Building cost 60.000 40,000 45.000 Building UCC (December 31, 2019) 52.000 37,000 40,000 2020 net rents (before CCA) 3.000 (5.000) 4,000 Land cost In 2020, Alan sold property 1 for $80.000 (land $12,000, building $68,000), and property 2 for $50.000 (and $6,000, building $44.000). Also, in 2020, he purchased property 4 for $90,000 (land $30.000, building $60,000). In 2020. property 4 had net rentals before capital cost allowance of $1.000. During the year, Alan gifted 1,000 shares of Shell Canada Ltd. (a public corporation) to his daughter. The shares had cost him $10 each and had a value at the time of the gift of $13 each. In 2020, his daughter (15 years old) received dividends of $2,000: she then sold the shares for $30 each 6. 7. In 2020. Alan gifted 2,000 shares of Exxon Ltd. (a public corporation) to his spouse. The shares had a value of $40 each at the time of the gift. He had paid $30 per share several years before. His spouse sold the shares in 2020 for $26 per share during a market slump. Alan's mother died in 2019 and left him her house. The house cost $40.000 at the time of purchase and had a value in 2019 of $60,000. Alan sold the house in 2020 for $66,000. 8. 9. Three years ago. Alan purchased 15% of the shares of two private corporations. Each carried on an active business. He sold the shares of both corporations in 2020. Information relating to the shares is as follows: Cost Proceeds of sale Terms of payment PC1 $42,000 56.000 $8,000/yr for 7 yrs PC2 $33,000 20,000 All cash 10. In 2020, during a market slump. Alan sold 500 shares of public corporation A for $30,000; the shares had cost him $40.000. Two weeks later. as the market began to strengthen, he purchased 500 shares of the same corporation for $29.000. 11. Alan also sold the following assets in 2020: Public corporation B shares Public corporation C shares Stamp collection Jewellery Boat Stereo set Cost $10.000 47,500 8,000. 6,000. 5,000. 600. Proceeds $12,200. 18,000 11.800. 1.000. 2.000. 800. 12. Alan had the following additional receipts in 2020: Dividends from Canadian public companies Interest on bonds Lottery winnings $4,500. 2.000. 6,000 $1,900 4.000. 13. Alan paid out the following in 2020: To purchase a computer for use at home when working on his employer's business Interest on bank loan to purchase shares of public corporation Interest on house mortgage (mortgage funds of $60,000 were used -$38,000 for the purchase of the house, $22.000. for the purchase of shares) Lump-sum alimony settlement to ex-spouse Tuition fees for attending university Donations Gift to a registered federal political party Contribution to an RRSP Annual dues to the provincial law society 6,000 9.000 1.000 4,000 1.000 2.700 1,200 Required: Calculate Alan's net income for tax purposes for 2020. (Enter deductions with a minus sign (-). If a number should be zero, enter 0.) A Employment income Employment Income Subtotal Property income Property Income Subtotal B Taxable Capital Gains and Allowable Capital Losses Total Capital Gains Total Capital losses Segment B subtotal Allowed LPP and PUP - Gains and losses Subtotal LPP and PUP transactions LPP & PUP amount allowed C Other deductions D Segment D Subtotal Net Income for Tax purposes