Or. Julienne Hutchins has hired your professional services to file her income tax return. Dr. Hutchins is a retired surgeon. Due to her failing eyesight, Julienne was required to retire from her ccupation at a younger age than normal. Fortunately, Julienne has more than enough income to support herself as a result of years of receiving a very large salary as a surgeon and a family nheritance. Julienne has invested most of her past employment earnings into a large portfolio which paid the following amounts during 2020 , the current year. (Click on the icon to view Part 1 of the additional information.) (Click on the icon to view Part 2 of the additional information.) Additional info (part 1) \begin{tabular}{|lr|} \hline Item & Amount \\ Dividends from public Canadian corporations (subject to high corporate tax rates): & $21,000 \\ Dividends from private Canadian corporations (subject to low corporate tax & 32,500 \\ rates): & 18,400 \\ Interest income received from Canadian sources: & 12,700 \\ Dividends from foreign corporations (translated into Canadian dollars): & \end{tabular} Note: Total foreign dividends earned was $14,150 less foreign tax withheld of $1,450. Julienne's portfolio of investments includes a five-year investment contract purchased three years ago on September 1 . The investment contract has a maturity value of $160,000 and an annual interest rate of 3%. The total interest earned on the investment contract will be paid on maturity on September 1, 2022, two years from now. Julienne did not receive any interest (cash) from this investment contract in 2020. Julienne's portfolio of investments is managed by a large Canadian brokerage firm called Top Notch Investments Inc. ("Top Notch") Top Notch charges Julienne investment counsel fees of $5,300 during 2020. Additional info (part 2) In 2019 , the previous year, Julienne received a large family inheritance, which she invested into a rental property. The property was purchased in 2019 , and Julienne has claimed the maximum amount of capital cost allowance (CCA) on the property in 2019. In 2020, the opening UCC balance in CCA Class 1 for the rental building is $330,000 and Julienne would like to claim the maximum CCA deduction on the rental income in 2020 . The rental income and expense information for 2020 is as follows. To assist with filing her tax return, Julienne provides you with detailed records from her bank. The documents indicate that Julienne has borrowed the following amounts from her bank. - $180,000 mortgage on the rental property with principal repayments totalling $15,500 and interest payments of $6,800 for 2020 - $375,000 mortgage on Dr. Hutchins's personal home with principal repayments totalling $20,500 and interest payments of $8,200 for 2020 - $180,000 loan used to purchase mutual funds with Top Notch Investments Inc. Julienne paid interest of $5,100 on this loan during 2020 . - $50,500 loan used to purchase Julienne's personal use vehicle. Julienne paid $2,330 of interest on this loan during 2020. Requirement 1. Compute Dr. Hutchins's net property income for 2020 . Fill in the table below to compute the net property income. (Round amounts to the nearest cent. Enter deductions with parentheses or a minus sign.) Requirement 2. Julienne has reviewed your calculation of net property income and she is confused. Julienne does not understand why the dividend income included in your calculation is different than the amounts she received in the year. Describe for Julienne the concept of integration and how this impacts the taxation of Canadian source dividends as well as the tax consequences of foreign source dividends received by an individual in Canada. Select all that apply. A. The "gross-up" refers to the procedure where dividend income earned by an individual from a Canadian corporation must be inflated by dividing the actual dividend by a certain fraction. B. The taxable dividend income reported on Julienne tax return will be equal to the inflated or "gross-up" dividend calculated as the actual dividend multiplied by a certain fraction. C. The taxable dividend income reported on Julienne tax return will be equal to the inflated or "gross-up" dividend calculated as the actual dividend divided by a certain fraction. D. The "gross-up" refers to the procedure where dividend income earned by an individual from a Canadian corporation must be inflated by multiplying the actual dividend by a certain fraction. Requirement 3. Julienne informs you that she plans on selling her rental property in the near future and using a portion of the proceeds from the sale to pay off some of her debt with the bank. Julienne would like your advice on which loans she should pay back first in order to achieve the most favourable tax consequences. Choose the correct answer. A. Julienne should use the proceeds from the sale of the rental property to repay her personal car loan rather than the loan she used to purchase mutual funds or her personal mortgage. B. Julienne should use the proceeds from the sale of the rental to repay the loan she used to purchase mutual funds rather than her personal car loan or her personal mortgage. C. Julienne should use the proceeds from the sale of the rental property to repay her personal mortgage and the loan she used to purchase mutual funds rather than her personal car loan. D. Julienne should use the proceeds from the sale of the rental property to repay her personal mortgage or her personal car loan rather than the loan she used to purchase mutual funds. Requirement 4. Prior to selling the rental property, Julienne plans on upgrading the wood siding on the house to vinyl siding. Explain to Julienne the difference between capitalizing and expensing costs, and indicate which treatment the siding cost should receive. Select all that apply. A. Generally, repairs and maintenance expenses are smaller, more frequent, expenses that restore the property to its previous condition but do not materially improve the property. B. Since repairs and maintenance expenses are fully deductible against rental income, capital expenditures are also deductible. C. Repairs and maintenance expenses are larger but less frequent costs that improve the value of the property. D. In Julienne's case, the cost of upgrading the wood siding to vinyl siding on the rental property would be considered a capital expenditure as siding will have enduring value (it will last for several taxation years) and it improves the quality of the rental property beyond its original condition. E. Capital expenditures are any expense that have an enduring value, increase the useful life of the rental property, or relate to the purchase of a separate asset. F. Although repairs and maintenance expenses are fully deductible against rental income, capital expenditures are not deductible. Requirement 5. Explain to Julienne the tax consequences that could occur if she sells the rental property due to the fact that she has claimed the maximum CCA on the rental property since acquisition. Select all that apply. A. The sale of the property could trigger recapture (in addition to a capital gain) if the property was sold for proceeds of disposition that exceed the capital cost of the property. B. Since real estate property has the potential to increase in value over time, Julienne could likely trigger recapture and capital gains on the sale of her rental property. C. Recapture on the disposition of rental property would not be included as taxable income on the Julienne's income tax return. D. Since the real estate property is decreasing in value, Julienne will trigger recapture on the sale of her rental property because the value of the property is less than the high UCC balance