Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

George Pharmacy is a pharmaceutical sales rep who has been very successful at his job in the last few years. Unfortunately, his family life has

George Pharmacy is a pharmaceutical sales rep who has been very successful at his job in the last few years. Unfortunately, his family life has not been very happy. Three years ago, his only child, Anna, was driving a car that was hit by a drunk driver. She and her husband were killed and their 14-year-old son, Kevin, was blinded in the accident. He also suffered extensive injuries to his jaw that have required major and prolonged dental work. George and his wife, Valerie, adopted Kevin. Valerie quit her part-time job to care for him. She also cares for her mother, Joan Drugstore, who lives with them. Joan suffers from dementia, Parkinsons, and severe depression. The family doctor has signed a letter stating that she is dependent on George and Valerie because of her impairments. Joan does not meet the residency requirements necessary to qualify for Canadian OAS payments. Valeries parents separated two years ago in Scotland after her father, David Drugstore, suffered enormous losses in the stock market. They were forced to sell their home and David moved to Chile. David phones periodically to request that money be deposited in his online bank account. Georges brother, Martin, completed an alcohol rehabilitation program after being fired for drinking on the job. He is also living with George and Valerie while he is enrolled as a full-time student at Western University. George is paying his tuition, and Martin has agreed to transfer any available education-related amounts to George. Although Martin plans to file his 2021 income tax return, he has not done so yet. Kevin is taking several undergraduate psychology courses at Western University. After hearing a talk given by an expert blind echo locator (a person who uses sound to locate objects), his goal is to become a researcher at the Brain and Mind Institute and study the use of echolocation. Kevin has agreed to transfer the maximum tuition credit to George. Other information concerning George for 2021 is provided on the following pages. Required: Prepare the 2021 income tax return of George Pharmacy using the ProFile tax software program assuming Valerie does not file an income tax return. List any assumptions you have made and any notes and tax planning issues you feel should be placed in the file. Ignore GST/HST implications in your solution by assuming that George does not qualify for the GST/HST rebate.

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

image text in transcribed

Can someone give the correct solution to calculate the taxes, please? Thank you

\begin{tabular}{|l|r|} \hline Hydro & 3,200 \\ \hline Insurance-House & 4,000 \\ \hline Maintenance and repairs & 3,800 \\ \hline Mortgage interest & 6,200 \\ \hline Mortgage life insurance premiums & 400 \\ \hline Property taxes & 6,700 \\ \hline \end{tabular} (Y/M/D) \begin{tabular}{|l|l|l|l|r|} \hline 2021-12-31 & George & Johnson Inc. & Out of Canada insurance & 731.00 \\ \hline 20210831 & George & Dr. Smith & Dental fees & 155.40 \\ \hline 20210919 & George & Optician & Prescription glasses & 109.00 \\ \hline 2021-11-07 & Valerie & Pharmacy & Prescription & 66.84 \\ \hline 2021-06-07 & Joan & Dr. Wong & Psychiatric counselling & 2,050.00 \\ \hline 2021-03-22 & David & Tropical Disease Centre & Prescription & 390.00 \\ \hline 2021-12-20 & Martin & Dr. Walker & Group therapy & 6,000.00 \\ \hline 2021-10-01 & Kevin & Dr. Takarabe & Orthodontics and dental & 30,000.00 \\ \hline \end{tabular} George paid $800 for the care and feeding of Kevin's seeing eye dog, Isis, in 2021. At the beginning of 2021, George had a 2020 net capital loss balance of $10,500 from the sale of shares in 2020 . He had not disposed of any capital property prior to 2020 . [ During September, David was arrested in Chile. Valerie had to spend three weeks in Chile and pay $2,000 in bribes before she could get him released from jail. George had to pay Nannies On Call $3,500 for in-home help to take care of Kevin while she was gone. T2202-(Martin) Box Amount \begin{tabular}{|l|r|r|} \hline Tuition fees-for Martin Pharmacy (brother) & A & 8,000 \\ \hline Number of months in school-part time & B & 0 \\ \hline Number of months in school-full time & C & 8 \\ \hline \end{tabular} T2202-(Kevin) Box Amount \begin{tabular}{|l|r|r|} \hline Tuition fees-for Kevin & A & 3,600 \\ \hline Number of months in school-part time & B & 8 \\ \hline Number of months in school-full time & C & 0 \\ \hline \end{tabular} Donor \begin{tabular}{|l|l|r|} \hline Valerie & Mothers Against Drunk Drivers (MADD) & Amount \\ \hline George & Canadian Institute for the Blind (CNIB) & 1,000 \\ \hline \end{tabular} T4 Box Amount \begin{tabular}{|l|r|r|} \hline Issuer-Mega Pharma Inc. & & \\ \hline Employment income & 14 & 378,000.00 \\ \hline Employee's CPP contributions & 16 & 3,166.45 \\ \hline Employee's El premiums & 18 & 889.54 \\ \hline Income tax deducted & 22 & 114,000.00 \\ \hline Employment commissions & 42 & 82,000.00 \\ \hline Charitable donations & 46 & 400.00 \\ \hline \end{tabular} In 2021, Mega reimbursed George $3,788 for meals and entertainment with clients, $2,268 for hotels, and $4,925 for airline tickets. In addition to George's salary, he also earns commissions of $82,000 which are included in the employment income of $378,000. His employer requires him to have an office in his home and has signed the form T2200 each year to this effect. On October 1, 2021, George purchased a new computer and software that will be used solely in his home office for employment-use. The computer cost $3,600 and the various software programs cost $1,250. Personal Information Taxnaver Tavnavor'c dAroce Real Estate Rental-Commercial Property Amount The building and fixtures were purchased on August 28, 2017. At the time the building and fixtures were being used as a drugstore and Mr. Pharmacy has retained the same tenant. George knows he should have been contributing to various savings plans over the years, but his increasing number of needy dependants required he spend all of his take-home pay to support them and he has not yet contributed to any savings plans. It was only in 2021 that his compensation had increased enough so that he had sufficient funds to consider savings plans for the first time. His daughter had made contributions totalling more than $10,000 to an RESP for Kevin prior to her death, but George has made no RESP contributions to the plan since then. George's 2020 RRSP deduction limit is $285,550

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Financial and Managerial Accounting

Authors: Jonathan E. Duchac, James M. Reeve, Carl S. Warren

11th Edition

9780538480901, 9781111525774, 538480890, 538480904, 1111525773, 978-0538480895

More Books

Students also viewed these Accounting questions