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. Johns net business income for tax purposes from his practice (a sole proprietorship) for the current year was $86,000. John paid both the employer and employee portions of CPP for a total of $5,796. During the year, John also made 4 quarterly instalments of $2,000 each. John also coaches hockey for his son Davids team, and he was surprised to learn it is a paid position. He earned employment income of $10,000 during the year. John has a restaurant business, which incurred a total net business loss of $6,000 in the current year. 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 years tax return; hence, John has a non-capital loss carryover balance of $2,000. John owns various investments. In the current year, he received interest income of $1,800 from TD Bank (a Canadian bank) and an eligible dividend of $1,500 (actual amount of the dividend) from Canco Ltd., a Canadian public corporation subject to high corporate tax rates. The federal gross-up is 38% and the federal dividend tax credit is 6/11 (ignore provincial for this question). 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 an allowable capital loss of $5,000. 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 Susans university tuition fees of $6,500. Susans net income in the current year was $3,000. Susan would like to make the maximum tuition credit transfer 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) $5,475 New prescription eye glasses for Susan 1,250 Prescription medication for Kim (50% covered by private health care) 475 Prescription medication for John (50% covered by private health care) 785 Private health care premiums 1,500 Answer the following: 1. Calculate Johns net income (in accordance with Section 3 of the ITA) and taxable income in the current year. Show all your calculations. 2. Calculate Johns net federal tax payable in the current year. Show all your calculations.