On March 1, 2022, Erin McCool began a new position at Art-In-Tell Inc. (AIT), a very successful artificial intelligence CCPC in Kanata North.

1) Erin moved from Montreal to start work at AIT. Because she had purchased her home in the height of COVID, when she sold her house in spring 2022, she incurred a $60,000 loss. AIT covered the loss on the home as a signing bonus.

2) AIT issues stock options to all employees upon hire to help align employee goals with those of the company and to stimulate productivity. Erin received 100 options to purchase shares for $5 each. At the time of issue, these options were valued at $6 each. She exercised the options in December 2022. The value of the shares at that time were $7 each.

3) Erin earns a base salary of $5,000 per month, and she earned commissions off her consulting revenues of $88,000 during 2022.

4) AIT provided Erin with a vehicle given she frequently visits clients. The vehicle cost $46,000 and Erin drove the vehicle a total of 30,000km in the ten months of 2022, of which 17,500km were for work. AIT pays all vehicle operating costs and incurred $6,300 in 2022 for Erins car.

5) Erin is required to maintain a home office, visiting the AIT headquarters only for team meetings. A T2200 form is signed to this effect. The following summarizes her Ottawa based home expenses for 2022; her office space is 12% of her entire home: Mortgage interest $23,000 Heat 1,800 Electricity 2,000 Insurance 1,300 Repairs and maintenance Kitchen renovation 46,000 Roof repair 8,700 Office flooring re-sanding 350 Property tax 5,900 Groceries 11,200 Office supplies 300

6) AIT pays for Erins membership at the Marshes golf and country club, which costs $5,000 annually. Erin used the membership actively in 2022, but always with clients or potential clients.

7) AIT took all employees on a work retreat to Mexico in November 2022 at a cost of $3,000 per employee. Significant others were permitted to join, and the additional costs ($1,500/person) were covered by AIT; Erins partner, James, came on the trip.

8) AIT gave gift baskets to all employees for Christmas. Erins basket included a $150 bottle of wine, a $200 VISA gift card, a sampling of gourmet cheeses ($75), a $300 set of Apple Airpods, and an AIT coffee mug ($12).

Required

a) Calculate Erins 2022 net employment income.

b) Briefly explain why any amount presented above has been omitted from your calculation.

c) Assume Erin sells her shares in 2027 for $25 each. Explain the 2027 tax consequences.