Case Assignment MGT 4151Y Advanced Taxation Fall 2023 Flower Inc. is a Canadian controlled private corporation. It is associated with two other CCPCs and has agreed that its share of the annual business limit for 2023 will be $215,000. Flowers fiscal year end is December 31. The following is the companys condensed Income Statement for the year ended December 31, 2023: Operating revenues $835,000 Operating expenses (250,000) Operating income $585,000 Other income: Non-eligible dividends from 20% associate (NOTE) 14,600 Interest on overdue accounts receivable 1,400 Eligible dividends from Canadian public corps. 8,000 Canadian source bond interest 2,100 Gain on sale of building 50,000 Gain on sale of land 40,000 Loss on sale of Class 10 asset (4,500) 111,600 Accounting income before taxes $696,600 NOTE: The associated company received a total dividend refund of $15,000 as a result of paying non-eligible dividends to its shareholders. Information about operating income is as follows: Depreciation & CCA: Operating expenses included $25,000 of depreciation expense. The following are the UCC balances for each class of assets at January 1, 2023: Class 1 Building (non-residential office building) $550,000 Class 8 Other assets 18,500 Class 10 Vehicles 105,000 During 2023, there were $15,900 of additions to Class 8. The additions qualify for the accelerated investment incentive. Also, Class 10 assets with a cost of $53,000 were sold for $24,000. The net book value of these assets was $28,500. New Class 10 assets, which qualify for the accelerated investment incentive, were purchased for $38,000. During the year, the company decided to lease office space and sold its Class 1 building for 630,000. The capital cost of the building was $650,000 and the net book value was $580,000. The land that the building was situated on was also sold for $400,000 and had a capital cost and ACB of $360,000. Life insurance premiums The companys operating expenses included $2,000 of life insurance premiums on the lives of the two main shareholders to provide funds for potential buyout of the shares from the estate in the event of the death of either shareholder. Charitable Donations: Flower made $2,500 in charitable donations that were deducted as operating expenses. Meals & Entertainment: The companys operating expenses included $12,000 of meals and entertainment expenses. $2,000 of the $12,000 was spent on the companys annual holiday party for all staff. Club Dues: The companys operating expenses included a $2,800 corporate membership fee to the local curling club. Warranty costs: The companys operating expenses included warranty expense of $25,000. The company incurred $17,500 servicing products returned under warranty. Other Information: 1. 90% of Flowers taxable income can be allocated to a province. 2. Flower had active business income of equal to its net business income for tax purposes for 2023. (This would be the amount without considering the items (and related adjustments) in other income when calculating the Net Income for Tax Purposes.) 3. The December 31, 2022 balance in Flowers non-eligible refundable dividend tax on hand (NERDTOH) account was $33,000. The dividend refund for the year ending December 31, 2022 was $10,800 and was received in 2023. 4. At the end of 2022, Flower had a nil balance in its GRIP and a nil balance in its eligible refundable dividend tax on hand (ERDTOH) account. None of the $32,000 of dividends paid in 2022 was designated as eligible. 5. At the beginning of 2023, Flower has a net capital loss carry forward of $78,700 and a noncapital loss carry forward of $2,900. Flower intends to deduct the maximum amount of any carry forwards against its 2023 income. 6. For 2022, the Adjusted Aggregate Investment Income of Flower and its associated companies is $36,000 and their Taxable Capital Employed in Canada was $4,580,000. 7. Flower paid $120,000 in taxable dividends during 2023. $105,000 of these dividends were designated as eligible. REQUIRED: A. Calculate the Net Income for Tax Purposes and Taxable Income for the year ended December 31, 2023. (Show the calculation of CCA by class including the ending UCC for each class. Assume that Flower Inc. takes advantage of the accelerated investment incentive but does not designate any assets acquired during the year as immediate expensing properties.)