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Carl Kay is the vice - president of KM Ltd . , a Canadian - controlled private corporation located in Halifax, Nova Scotia. KM operates
Carl Kay is the vicepresident of KM Ltd a Canadiancontrolled private corporation located in Halifax, Nova Scotia. KM operates a real estate development business constructing and selling commercial buildings and residential apartments. Carls financial transactions include the following.
Carl receives a salary of $ from KM From this amount, KM deducted EI and CPP of $includes CPP enhanced contributions of $ and income tax of $ The company provides him with a car that cost $ and that has an undepreciated capital cost of $ The operating costs of $ were paid by KM In Carl drove the car km of which km were for employment purposes. KM contributed $ on Carls behalf to a deferred profitsharing plan. Although KM does not have a group life insurance plan, it pays Carls personal life insurance premium of $coverage $
During the year, Carl sold shares of KM Ltd for $ per share. He acquired the shares three years earlier for $ per share as part of a company stockoption plan. At the time of purchase, the shares were valued at $ per share.
In Carl constructed a suite apartment block. He sold the property in for $ which was $ more than the original land and building cost. He received $ of the proceeds in cash, with the balance due in five annual instalments beginning in The property incurred a net rental loss of $before amortization
Carl sold his summer cottage for $ after it was announced that a waste disposal site would be developed in the area. He purchased the cottage six years earlier for $
In Carl loaned $ to Alloy Ltd a Canadiancontrolled private corporation. All of the companys assets are used in an active business. The interest of $ which Carl included in income, has not been received. The company is in severe financial difficulty and may not survive beyond next year.
Carl sold shares of a public corporation, purchased in for $ for $
In November, Carl received a legal bill for $ relating to a dispute over a tax reassessment. Carl paid $ in December and the balance in January
Carl received eligible dividends of $ and noneligible dividends of $ from Canadian corporations and $ from a foreign corporation. The foreign corporation remitted a withholding tax to its government.
Carl celebrated his th birthday in December He supports his spouse, who is retired. His spouse has interest income of $ in During the year, Carl made gifts of $ to a local charity. He paid tuition fees of $ to attend a threemonth evening course at a university.
Carl has used his entire capital gains deduction. At the end of he has unused net capital losses of $ and noncapital losses of $
Required:
Calculate Carls net income for tax purposes, taxable income, and federal income tax.
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