For the taxation year ending December 31, 2020, Lorne Inc., a Canadian-controlled private company, has a Net Income for Tax Purposes of $340,500. This is made up of $312,400 of active business income and $28,100 of dividends from various Canadian public companies. It has
been determined that $211,300 of the active business income qualifies as manufacturing and
processing profits.
During 2020, the company makes donations to registered charities totaling $31,400.
At the beginning of 2020, the company has a non-capital loss carry forward of $29,300. It intends to deduct all of this carry forward during 2020.
Lorne Inc. is associated with three other CCPCs. The companies have agreed that each company will claim one-quarter of the annual business limit. The combined Taxable Capital Employed in Canada for the four associated companies is less than $10 million in both 2019 and 2020. The combined Adjusted Aggregate Investment Income of the four companies was $45,000 in 2019.
Required: Determine the minimum Taxable Income and Part I federal Tax Payable for Lorne
Inc. for the year ending December 31, 2020. Show all calculations, whether or not they are necessary to the final solution. As the corporation operates in a province that has a reduced tax rate for M&P activity, a separate calculation of the federal M&P deduction is required.