Morton Forms is a Canadian controlled private corporation specializing in designing and printing custom business forms. It is owned by Viola Morton. For the taxation year ended December 31, 2018, Ms. Morton's daughter, Linda, who works in the business, has calculated a Net Income for Morton Forms of $576,183. In calculating this figure, Linda used generally accepted accounting principles.

Linda has produced the following Income Statement for the year ended December 31, 2018:

Morton Forms Inc. Income Statement Year Ending December 31, 2018
Sales		$ 7,578,903
Cost of Goods Sold		5,468,752
Gross Profit		2,110,151
Expenses
General and Admin	$ 852,000
Amortization Expense	550,000
Interest	8,500	1,410,500
Operating Income		699,651
Other Income:
Loss on Disposal of Intangible Assets		(17,000)
Interest Income		110,532
Income before income taxes		793,183
Income Taxes
Current	182,000
Future	35,000	217,000
Net Income		$ 576,183

During your review of Lindas work and last years tax return for the corporation, you have made the following notes:

1. In the accounting records, the Allowance for Doubtful Accounts was $25,000 at December 31, 2018, and $20,000 at December 31, 2017. During 2018, the company had actual write-offs of $11,750. As a result, the accounting Bad Debt Expense was $16,750. This amount is included in General and Admin expenses on the Income statement.

2. A review of the listing of receivables (for tax purposes), indicates that the actual items that may be uncollectible total $15,000 at December 31, 2018. In 2017, the company deducted a reserve for bad debits of $13,000 for tax purposes.

3. General and Admin Expenses include:

Donations to registered charities	27,000
Accrued Bonuses Accrued Sept 1, 2018. Paid June 15, 2019	78,000
Meals and entertainment costs:
$1,000 per month for premium membership at gold club for Viola	12,000
$200 per month for membership at gold club for salespeople	2,400
Meals while entertaining clients	32,000
Foods costs for Violas personal chef for her meals at home	5,000
Annual summer BBQ for all staff	6,000
Sponsorship of local baseball team where company name is prominently displayed on front of jersey	15,000
Advertising in a US trade magazine directed at US clients	100,000
New software purchased October 1, 2018. ($13,000 for applications and $25,000 for systems)	38,000
Accounting and legal fees for amended to the articles of incorporation	6,000
Costs to attend annual convention of finger knitters in Thailand. While at the convention, Viola was sure to hand out business cards and talk to other attendees about her business with the intention of claiming the convention as a business expense.	17,000

4. Interest expense consists of the following:

Interest Expense - operations	5,000
Penalty and interest for late and insufficient instalment payments	2,000
Interest on late payment of municipal property taxes	1,500

5. Travel costs (included in general and admin expenses) include both air travel and travel reimbursement to employees for business travel. The company policy is to reimburse employees $0.58 per kilometer for the business use of their automobiles. During the year, seven employees each drove 4,000 on employment related activities and one employee drove 7,500 kilometers. None of the kilometer based allowances are required to be included in the income of the employees.

6. Maximum CCA has always been taken on all assets. The undepreciated capital cost balances at January 1, 2018 were as follows:

Class 1 (4%)	$ 650,000
Class 8	95,000
Class 10.1	17,850
Class 14	68,000
Class 14.1	18,098
Class 53	135,000
Class 44	65,000

7. There was a loss on disposal of a limited life license to produce copyrighted materials for a major distributor. This license originally cost the company $95,000, and it was sold for $63,000 in 2018. The book value of the license at the time of sale was $80,000. When the license was sold, it was the only asset in its CCA class. The loss was claimed as a loss on disposal of intangible assets on the Income Statement.

8. Purchases and sales of equipment and other capital assets made during 2018 were as follows. (Note: any items discussed in other sections are included in this list as well)

a. The company purchased land and constructed a new building on it during the year. The building was used 95% for manufacturing and processing. The cost of the land was $350,000, and the building cost $475,000 to construct.

b. The company purchased a new set of furniture for the reception area for $1,200.

c. Some outdated desks used by the finance department with a cost of $5,000 were sold for proceeds of $3,500.

d. Landscaping of grounds around the new building cost $35,000. This amount was capitalized for accounting purposes.

e. A company car for use by the president of the company was purchased for $90,000. This car replaced the only other existing company car, which was purchased in 2013 for $95,000. The old car was sold for $60,000.

f. A fence around the new building cost $52,000.

g. New software was purchased: $13,000 for Applications and $25,000 for Systems.

9. The company sold some shares that had been purchased several years ago. The capital gain on these shares was $152,708. Linda didnt know how to account for this, so she credited the entire amount to retained earnings.

Required: Determine Morton Forms minimum Net Income for Tax Purposes for the year ending December 31, 2018. Ignore GST/HST/PST implications. Using the supplied formatted Excel spreadsheet, indicate your rationale for the treatment of all information given.