John Smith is 55 years old, married to Kim (age 50 years), and they have two children, Susan (age 19) and David (age 15). Susan is a full-time student, taking post-secondary level courses at a university in Canada, and David is in high school. Kim is a lawyer working for a law firm; her net income in the current year is $98,000.

John is also a lawyer but he is self-employed, with his own law practice. John's net business income from his practice (a sole proprietorship) for the current year was $86,000.

John is also a partner in a restaurant business, which incurred a total net business loss of $18,000 in the current year; as a partner in this business, John's share of this loss is $6,000. The restaurant business also incurred a large business loss in the previous taxation year, which John was not able to fully utilize on his prior year's tax return; hence, John has a non-capital loss carryover balance of $2,000.

John also received foreign business income from Legal Widgets Ltd (an American corporation) in the amount of US $1,000 (Canadian dollars = $1,188) before tax, from which U.S. income tax of US $117 (Canadian dollars = $139) has been deducted.

John owns various investments. In the current year, he received interest income of $1,800 from TD Bank (a Canadian bank) and a dividend of $1,500 (actual amount of the dividend) from Canco Ltd., a Canadian public corporation subject to high corporate tax rates.

In November of the current year, John disposed of various shares and marketable securities, which resulted in a taxable capital gain of $8,000, and he disposed of land for a capital loss of $10,000. John has a net (allowable) capital loss carry forward (realized five years ago) of $4,000, which John would like to use as soon as possible.

John provides you with the following other information:

His daughter, Susan, was enrolled as a full-time student taking post-secondary level courses at a university in Canada for eight months of the current year. John paid Susan's university tuition fees of $6,500. Susan's net income in the current year was $3,000. Susan would like to make the maximum transfer available (for tuition, education, and textbook amounts) to her father.

John always makes a donation to the United Way, a registered charity, during its annual campaign. In the current year, he made a donation of $1,500 to United Way.

John incurred the following medical expenses during the current year:

Expenses

Amount

Orthodontic work for David (braces removed)

$5,475

New prescription eye glasses for Susan

1,250

Prescription medication for Kim

237.50

Prescription medication for John

392.50

Private health care premiums

1,500

Part A: In an Excel template provided, calculate the client's minimum Division B (net) income for tax purposes in accordance with the format of Section 3 of the Income Tax Act for the 2019 taxation year. Show all your calculations.

Part B: Calculate your client's taxable income.

Part C: Calculate your client's federal taxes owing or refundable for 2019.

Part D: When finished, upload your Excel workbook into Case Study III in D2L. Obtain solution from the instructor. Grade your answer and explain why you made the errors. Was it a calculation error, misunderstanding of the concept, etc.? Upload graded Excel work with your reflection into Case Study III in D2L to receive reflection marks.