Other Income, Gains & Losses 376,340 The Class 14 balance relates to a franchise agreement which was signed on September 1, Income Before Tax Expense 661,025 2017 . The franchise agreement has a term of 8years. The franchise Income Tax Expense fee, which was paid on the date the agreement was signed, was 32,574 Current 132,205 There were no further expenditures related to this franchise in the current year and Future 66.103 5 (198,308) the Initial franchise fee was expensed in 2017 . Net Income 462,718 Detailed Information Regarding Above Income Statement: Prior to 2019 , all laptops were leased. During the current year, laptops and Colorfast spent 16,239 during the year on landscaping for its new building. computers were purchased for 50,071 For accounting purposes, this was treated as an asset. The Company will not amortize this balance as it believes the work as an unlimited life. In addition, on July 1, 2019 Colorfast purchased an Nissan GT-R Nismo for Curtis Chen (director & shareholder) costing 217,200 Selling and Administrative costs include 5,661 in bad debt expense calculated based on a review of the aged receivables listing. 7 On June 6, 2019 , Colorfast Inc. acquired an unincorporated business. The purchase price included 55,421 for goodwill, At the end of the year, the goodwil was Selling & Administrative costs include contributions to registered charities of 17,513 tested for impairment and an impairment loss (for accounting purposes) was recorded in the amount of $ 13,855 (this is included in Other Income, Gains & Losses on the 4 Selling & Administrative costs includes the following: Income Statement above). - Insurance premiums on a life insurance policy for the president 11,332 Note: the life Insurance policy is required as collateral for a loan 8 Selling and administrative costs includes interest and late filing penalties for GST returns of -legal fees paid to the corporation's lawyer to review a loan contract 4,736 406 Business meals and entertainment costs of 18,474 9 Other income, Gains & Losses Includes an accounting gain on the sale of land owned by the 5 Selling and Administrative costs include compensation expense for management, Curtis and Constance corporation. The land was purchased several years ago and has been used as a storage lot who are also the owners of Colorfast Inc. Included in compensation expense (in addition to for Colorfast Inc. The land was originally purchased for 94,729 and was salary expense] are the following amounts: sold for proceeds of 368,113 . The purchaser will pay for the land using instalment 184,056 in Membership fee for a local golf and country club 6,946 payments of 66,260 in 2019 , then 2021 . Traverse Ltd, would Bonuses declared on Dec.31, 2019 20,299 2020 and the remainder wil be paid in "Note: The bonuses were paid on Mor, 15 2020 like the maximum deferral on the taxable capital gain on the sale of this land Automobile Allowances for business travel incurred 10,207 "Note: The allowance was paid at the rate of 408 per business kilometer 10 According to the prior year's corporate tax return, Colorfast has the following RDTOH balances: Eligible Refundable Dividend Tax on Hand S 7,443 (the Company received a dividend refund of 2,853 from the 6 On January 1, 2019 , the Company had the following UCC Balances: Eligible RDTOH in the prior year) $ 26,050 Class 1 - Building acquired in 314,229 Non-eligible Refundable Dividend Tax on Hand 2014 (the Company received a dividend refund of 9.986 from the Class 8 227,349 Class 10 40.642 Non-Eligible RDTOM in the prior year) Class 14 27,141 11 Also included in the Other Income, Gains & Losses balance recorded on the Income Statement are the following amounts: There are no additions or dispositions of Class 1 assets during the year. Eligible Dividends from the Company's portfolios of investments 17,295 305,839 (Proceeds) (note: the above dividends were received from Taxable Canadian Corporations) There are dispositions of Class & assets during the year of 12,562 and acquisitions in the total amount of 147,790 . The Class & assets that Non-Eligible Dividends from a wholly owned subsidiary were sold in the year had an original cost of 197,795 (note. the wholly owned subsidiary received a dividend refund as a result of paying this dividend of 3,769 Canadian & Foreign Source Interest Income 51,627 The Company has decided to lease of all its trucks and trailers in the future, therefore (note. the foreign source interest income included in the total above is 21,683 all of the assets in Class 10 are sold during the year. The capital cast of these assets was 276,610 and the proceeds of disposition amounted to 149,080 The net book value of these assets was 12 Colorfast Inc. has net capital loss carryover balance from 2014 of 113,753 and the resulting accounting 67,984 and a non-capital lass carryover balance from 2015 of gain of 35,327 was included in Other Income and Expenses. 27,336 . Management has indicated that they would like to deduct as much of these amounts as possible in the current year.13 The corporation has permanent establishments in Alberta, Ontario and the United States, Its gross revenues, salaries and wages, and operating profit values are as follows; Location Gross Revenue Payroll Gross Profit Albert 1,048, 784 95,148 270,654 Ontario 31,125 4,669 54,131 U.S. 372,149 74,430 256,039 Totals 1,452,058 174,247 580,823 14 Colorfast inc. is associated with two other Canadian controlled private corporations. They have agreed to allow Colorfast to claim 236,464 of the total annual business limit 15 The foreign jurisdiction withheld tax of 38,406 from the US-source business income and 3,253 from the foreign non-business (interest) Income, Assume that the foreign tax credits for business and non-business income are equal to the amounts withheld. 16 Colorfast Inc. paid the following dividends to it's shareholders, Curtis and Constance Chen, in the current year: Eligible Dividends 4,46G Non-Eligible Dividends 15,630 Required (Case Al: Please prepare a response to each of the questions indicated below (Part A through D below) using the excel spreadsheet template. Be sure to show all of your work. Include income Tax Act references for each adjustment made in your calculations in PART A & PART B of the assignment only. Your submission, with all of your group member's names, must be submitted via the Blackboard Learn assignment #2 link. PART A: Calculate the corporation's minimum net income for the year ended December 31, 2019 under the provisions of Division B of the Income Tax Act. Support your with calculations and the appropriate references to the Income Tax Act, Be sure to use the Section 3 format for the calculation of net income for tax purposes. Marks will only be receleved for income properly categorized by source. Colorfast Inc. has a policy of always taking maximum CCA deduction, Please show all of your work for the CCA calculations. Assume all expenses are reasonable in the circumstances, unless otherwise indicated above. PART B: Calculate the minimum taxable income for the company for the year ended, December 31, 2019 . Support your answer with calculations and provide the appropriate references to the Income Tax Act. Indicate the type and amount of any balances available for carry forward to subsequent years. PART C: Determine Colorfast Inc.'s Part I Tax Payable for the year ending December 31, 2019 and provide all explanations and assumptions you made, if any. NOTE: Part I Tax Payable includes the following amounts: base amount of federal tax, general rate reduction, federal tax abatement, additional refundable tax (ART) on investment income, the small business deduction and foreign tax credits. PART D: Determine Colorfast Inc.'s Part IV Tax Payable for the year ending December 31, 2019