Mr. Davis, age 45, who resides in Vancouver, has provided you with the following information concerning his 2021 tax return: Employment income for tax purposes: $120,000 Proprietorship (business): Income Statement for the year ended December 31, 2021 Revenues $200,000 Expenses: Cost of goods sold $80,000 General and administrative 20,000 Depreciation 35,000 Other expenses 5,000 Total expenses (140,000) Net income before tax $60,000 Tax expense (18,000) Net income after tax $42,000 Additional information: General and administrative expenses include Golf membership fees of $2,000 Other expenses include interest and penalties on income tax assessment of $3,000 CCA for the year was $30,000

He sold an equipment he used in his business (only asset in class). There was no accounting gain or loss realised. Details of this sale for tax purposes: Equipment Original cost $100,000 UCC, January 1, 2021 95,000 Proceeds of disposition 80,000 Property income (loss) for tax purposes: Rental loss (not due to CCA) -15,000 Canadian interest income 12,000 Taxable dividends, in cash, received from: taxable Canadian public corporations (eligible) 8,000 Interest on bank loan to purchase Canadian securities which yield the above dividends -2,000 Taxable capital gains (allowable capital losses): Shares of X Ltd., a Canadian public company -17,000 Shares of Y Ltd., a Canadian public company 6,000 Listed personal property 4,000 Personal-use property -2,000 Other: Mr. Davis received child support in the amount of $10,000 and spousal support of $7,000. He contributed to TFSA in the amount of $15,000. He paid child care costs of $9,000 for his 6 year old child (Earned income for child care costs is $175,000).

Required: Compute Mr. Daviss Net Income for Tax Purposes (Division B income), according to the rules in Section 3. All items must be correctly located in the correct paragraph to obtain marks. (Hint: Calculate Net Business Income with Recapture/Terminal loss, Net Property Income, Net Taxable Capital Gains, Child Care Costs first. Then put everything together under Section 3).

IMPORTANT - Please show all calculations to gain full marks.