ACCT336TAXATION IIQuiz # 3aWinter 2020

1. Lang Lang Ltd., a CCPC eligible for the small business deduction, has a March 31 year end.Due to the death of the owner/manager, the tax return for the year ended March 31, 2017 was not filed until May 12, 2019. The unpaid tax on March 31, 2017 was $15,500. Lang Lang Ltd. has never filed a return late before.What is the total late file penalty that the corporation is required to pay?(Do not include any interest payable.)

A. $775

B. $2,635

C. $1,860

D. $3,720

2. Which of the following statements with respect to corporations is NOTcorrect?

A. Corporate income tax returns must be filed within 6 months of the end of the taxation year.

B. All corporations must file their income tax returns electronically.

C. If the corporation is a CCPC, the due date for any balance owing is three months after the end of the taxation year.

D. If a corporation has foreign operations, it can determine its Canadian tax liabilities on the basis of financial statements prepared in the corporation's functional currency.

3. For corporations, the filing deadline for tax returns is:

A. April 30.

B. the fiscal year end.

C. three months after the fiscal year end.

D. three months after the fiscal year end if the small business deduction is claimed, otherwise two months after the fiscal year end.

E. six months after the fiscal year end.

4. PS Swim Inc. has a year end of November 30.It is a small CCPC.For its 2018 taxation year, its income tax return is due on:

A. January 31, 2019.

B. February 28, 2019.

C. April 30, 2019.

D. May 31, 2019.

E. None of the above.

Question # 5...............................................

Dustin Inc. has a September 30 year end and is not a small CCPC.For its taxation year ending September 30, 2016, its tax payable was $33,500.The corresponding figure for the year ending September 30, 2017 was $93,400.It is estimated that, for the year ending September 30, 2018, its tax payable will be $56,200.What would be the minimum instalment payments for the taxation year that ends on September 30, 2018, and when would they be due?How would your answer differ if Dustin Inc. qualified as a small CCPC?

Question # 6.............................

Acton Enterprises was incorporated in Montana in 1964.Until 2014, all of the company's directors were residents of Bozeman, Montana, with all meetings held in that city.However, in 2014, all of the directors moved to Calgary, Alberta, with all subsequent meetings held in that city.Determine the residency status of Acton Enterprises for the taxation year ending December 31, 2018.

ACCT336TAXATION IIQUIZ # 4aWinter 2020

1. For a public corporation, which of the following statements is correct with respect to filing a notice of objection?

A. It must be filed no later than 180 days from the date on the notice of assessment.

B. It must be filed the later of 90 days after the date on the notice of assessment and one year from the filing date for the return under assessment.

C. It must be filed the later of 180 days after the date on the notice of assessment and one year from the filing date for the return under assessment.

D. It must be filed no later than 90 days after the date on the notice of assessment.

2. Which of the following is NOTa taxable entity for Canadian income tax purposes?

A. Darklyn Ltd., a Canadian resident corporation.

B. Ms. Sarah Bright, a Canadian resident.

C. Walters and Walters, a group of CPAs operating as a partnership.

D. The Martin family trust.

3. For its 2018 taxation year, its first year of operation, PS Swim Inc. filed its return three months late. The unpaid tax at the due date for the return was $2,500. This amount was not paid until the return was filed. What would its penalty be?

A. Nil.

B. $75.

C. $125.

D. $200.

E. $500.

4. The balance due date for a corporation is:

A. April 30 of the following year.

B. The same as the filing deadline.

C. Three months after the end of the fiscal year, or two months after the end of the fiscal year if the corporation is a small CCPC.

D. Two months after the end of the fiscal year, or three months after the end of the fiscal year if the corporation is a small CCPC.

Question # 5................................

Wolfhowl Ltd. was incorporated in Banff, Alberta in 1961.Despite its Canadian charter, the Company has never carried on business in Canada.However, until 1971, all meetings of the Board of Directors were held in Banff.Since 1971, all board of directors' meetings have been held in Wyoming.Determine the residency status of Wolfhowl Ltd.

Question # 6..............................

Chemco Inc. has a December 31 year end and is not a small CCPC.For 2016, its taxes payable were $146,300, while for 2017, the amount was $94,650.For 2018, its estimated taxes payable are $52,300.What would be the minimum instalment payments for the 2018 taxation year and when would they be due?How would your answer differ if Chemco Inc. qualified as a small CCPC?

ACCT336TAXATION IIQUIZ # 5aWinter 2020

Capital Gains Reserves

CL Ltd. is a long distance moving company.In 2016, CL purchased a40 acre tract of vacant land in an industrial park near Calgary.The cost of this land was $11.8 million.

It was the intention of Casper Lopez, president and driving force of CL Ltd., to relocate all of CL's operations to this site in about 4 to 5 years.He planned to add furniture storage and self storage facilities.However, Casper was aware that he had purchased this land at a very favourable price.It was his belief that, if the plans changed, CL would be able to make a significant gain by reselling the land.He informed the property manager of the industrial park that he might be interested in selling part of the land if the price was right.

Early in 2018, Casper is informed that he has terminal cancer.Shortly afterwards, CL receives an unsolicited offer of $4.3 million for 10 acres of the Calgary site which Casper accepts.In order to facilitate the sale, CL takes back a $2.8 million first mortgage on the property.The mortgage will be repaid in 4 annual instalments of $700,000 each, beginning in 2019.

CL still intends to move its current operations to this site.However, because of Casper's illness, future plans to use the remainder of the site for new storage facilities are unlikely to move forward.CL is considering whether more of the land should be sold as it does not appear it will be needed.There are three purchasers who are interested in buying 1 to 2 acres each.

Required:CL has sought your advice as the appropriate tax treatment of the sale transaction.Provide the required advice.