Ms. Dory Nemo owns 3 rental properties. However, during 2016, the rental market took a downturn so Dory suffered a rental loss of $21,000. Needing money, she sold shares for which she incurred a $6,400 capital loss. In 2017, the rental market improved so the properties earned Dory $17,500 in rental income. She also had a taxable capital gain from the sale of land of $1,900.

Dory has no other source of income or loss in either year and does not anticipate realizing capital gains in the foreseeable future. Assume she wishes to minimize her net capital and non-capital loss carry overs at the end of 2017. Use professional judgment in determining which losses should be used when there is a choice.

Required:

Calculate Dory's Net Income for Tax Purposes and Taxable Income for 2016 and 2017. Clearly indicate the amount and type of any losses available for carry forward at the end of both 2016 and 2017. Also, ignore non-refundable tax credits in answering this question (taxable income can be reduced to zero).