Lorna's accountant does not plan to deduct any dog related expenditures other than the maximum allowable SUV expenses. Do you agree this is the appropriate course of action? Justify your answer.

Indicate how much of the preceding expenditures you feel Lorna should deduct in the calculation of business income for 2020.

Calculate the amount, if any, that will be included in Lorna's 2021 Net Income For Tax Purposes due to the sale of Sigmund.

Ignore all GST/HST considerations in your solution.

Please see attached.

Required: Purposes for the year Assignment Problem Six - 10 atric disorders. Her husband, Alec Jung, was the president of a very successful mental health Deductibility of Business Expenses And CCA) Lorna Jung is a psychiatrist whose private practice specializes in treating children with psychi- clinic until it was bought out last year. He is currently creating and testing recipes to be included in his new ground breaking BBQ cookbook Over the past two years, Loma has been investigating the patient benefits of having a therapy the effectiveness of this therapy. She is convinced that the use of a therapy dog will be advanta- dog as part of her practice and has amassed an extensive library of clinical studies that show geous to many of her patients and will improve the rate of their recovery. that she named Sigmund. This particular breed was designed to be used as therapy dogs, and On January 2, 2020, after much research, Lorna purchased a Labradoodle puppy for $2.000 Sigmund's mother was a well established therapy dog. Sigmund became an important part of the Jung family. Whenever Sigmund wasn't in training or at Loma's office, Alec would take Sigmund for walks and to the dog park. As Alec currently has no source of income, he charged Lorna the going rate of $20 per 1 hour (minimum) walk. He plans to report this income on his tax return. For the month of September 2020, Sigmund accompanied Lorna to consultations with all her the attitudes of almost all her patients. Some children who refused to speak with her could patients except for those few who had a fear of dogs. She saw an immediate improvement in describe their feelings when they addressed Sigmund. As word of Lorna's success with her therapy dog treatments spread, new patients would regis ter only if assured that Sigmund would be present. On Lorna's website, she had two hourly rates. The one with Sigmund participating was 15 per cent higher than the rate without Sigmund. By December 31, 2020, 70 percent of her patients were paying the higher rate with Sigmund. On July 1, 2020, in anticipation of taking Sigmund to the office and patient's homes on a regular basis, Lorna signed a three year lease for a Lexus SUV with sufficient room in the back for a sturdy, well-padded dog crate. The lease payments were $950 per month. The manufacturer's list price for the vehicle was $65,000. As the Jungs have two other vehicles, this SUV was used only for business purposes. 294 Chapter 6 Assignment Problems For the year ending December 31, 2020, Lorna spent the following amounts on Sigmund: Food, including puppy vitamins and supplements Veterinary fees Therapy dog training course fees Dog walking fees paid to Alec Car lease for SUV [($950)(6)] Operating expenses for SUV Purchase of paw protectors (good for one winter) Purchase of custom made protective clothing (estimated life of three years) Dog crate Total Dog-Related Expenditures $ 2,600 800 1,400 3.280 5,700 2.950 140 820 400 $18,090 Lorna's tax accountant informed her that Sigmund's original cost could not be written oth as there was no specific CCA class for dogs and CCA Class 8, the usual catch-all class, specifically excluded animals. thought, she decided she had to close her practice in order to care for them and help in the long In 2021, Lorna's parents were in a car accident that left them both severely injured. After much rehabilitation process. Lorna knew that Sigmund would become depressed without patient interaction, so she sold Sigmund to Dr. Skinner, a psychiatrist she had known for years who already had a therapy dog Skinner due to confidentiality constraints, she emailed all her patients that Sigmund would be available at Dr. Skinner's office so he would soon see familiar faces there. Dr. Skinner paid $8,700 for Sigmund. This included $200 for the protective clothing and the crato He promised the Jungs unlimited visitation rights. Due to her high income, Lorna always claims the maximum deductions available each year