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Question 1(100 minutes) Jane Lee works as a Pharmaceutical rep for Pfiler, a public corporation with an annual salary of $115,000. Jane has come to you and asked for your assistance in calculating how much her taxable income will be for the 2020 taxation year. In preparation for your meeting, Jane has provided you with some supplemental information An area that always bothered Jane was the amount of deductions that came off her pay cheque and her prior accountant told her none of the amounts are eligible to reduce her taxable income, but she provided to you just in case the prior accountant was incorrect. For the 2020 year, the amounts were: Payments to Group Medical for Health and Dental CPP contributions Income tax deductions El Premiums Donation to local church Payments to her employer social club $960.00 $2,518 $32,521 $961 $1,200 $50 On March 1, 2019, Pfiler granted Jane options, allowing her to purchase 1,200 of the company's shares at a price of $12 per share. At that time the shares were trading at $11 per share. During 2020 Jane watched the value of the shares increase rapidly, so on November 8, 2020 she decided to purchase $1,200 shares at a time when the shares were trading at $23 per share. In December of 2020, Jane wanted to splurge for Xmas so she decided to sell all her shares, and at that time the shares were trading at $25 per share. Pfiler also decided in May of 2020 to purchase a car for Jane to use. They purchased her a car at a cost of $70,000 on June 1 2020 and Jane had use of the car for the remainder of 2020. During that time the company paid the operating costs ($12,045) but insisted that Jane keep a log of usage and that she reimburse the company $1 for every personal km she drove, which she did on December 31. Her log for the year shows the following: Total KM driven 28,000 Employment related KM 25,000 . Jane also wanted to earn a little extra income so in 2018 she begin a home based business of selling furniture her brother would construct for her, he name of the business was AAA Furniture. For the taxation year ending December 31, 2020, her bookkeeper has determined that AAA had accounting income before taxes, determined in accordance with generally accepted accounting principles, of $168,000. In determining her business income for tax purposes, the following information is relevant: 1. The accounting income figure included a deduction for amortization of $21,000. 2. On January 1, 2020, AAA had the following UCC balances: Class 1 (small Building Acquired In 2018) $75,000 Class 8 $3,000 Class 10 $ 11,000 3. During 2020, AAA spent $6,000 landscaping the grounds around its building. This amount was recorded as an asset in the accounting records amortized for accounting. 4. AAAs 2018 accounting income included a deduction for meals and entertainment of $1,600. 5. AAA's 2018 accounting income included a deduction for equipment Jane purchased for $5,500. Her bookkeeper told her she expensed these items to make it easier to do the books. the books. 6. Late in 2020, Jane decided to sell the building to her friend and then lease it back to continue the business. She sold the building for $215,000, a good return considering she purchased it originally for $135,000. No land needs to be considered as Jane never put the value of the land in the business. All the equipment inside the building remains with Jane. Jane inherited a rental property in 2006 from her uncle who passed away. At time of the inheritance the property was valued at $100,000, of which $6,000 was land. Jane has been renting out this property since 2006. On January 1, 2020, the UCC on the building, class 1, was $42,000 and over the years Jane had purchased appliances and the UCC on those on January 1, 2020, class 8, was $10,700. (Assume building are class 1, 4%) During 2020, Jane provided you with the following information regarding the rental property She sold the building on June 30th for $150,000, of which $10,000 was allocated to land and $2,000 for appliances. She purchased a new rental on July 1 for $250,000, of which $25,000 was for land and $15,000 for appliances. For the year, the total net rental income before CCA was $28,600 on the two properties. Finally, Jane informs you that she has some shares in a small family owned business in Vancouver that she inherited from another uncle back in 2002. Each year this business pays out a dividend to its shareholders and for 2020 they informed Jane that she received $10,000 and she said they told her to tell you that the dividend is a non-eligible dividend. Jane is coming on Saturday for the meeting and she said she needs to know her Taxable income for 2020 and would like to see how you calculated it. Question 1(100 minutes) Jane Lee works as a Pharmaceutical rep for Pfiler, a public corporation with an annual salary of $115,000. Jane has come to you and asked for your assistance in calculating how much her taxable income will be for the 2020 taxation year. In preparation for your meeting, Jane has provided you with some supplemental information An area that always bothered Jane was the amount of deductions that came off her pay cheque and her prior accountant told her none of the amounts are eligible to reduce her taxable income, but she provided to you just in case the prior accountant was incorrect. For the 2020 year, the amounts were: Payments to Group Medical for Health and Dental CPP contributions Income tax deductions El Premiums Donation to local church Payments to her employer social club $960.00 $2,518 $32,521 $961 $1,200 $50 On March 1, 2019, Pfiler granted Jane options, allowing her to purchase 1,200 of the company's shares at a price of $12 per share. At that time the shares were trading at $11 per share. During 2020 Jane watched the value of the shares increase rapidly, so on November 8, 2020 she decided to purchase $1,200 shares at a time when the shares were trading at $23 per share. In December of 2020, Jane wanted to splurge for Xmas so she decided to sell all her shares, and at that time the shares were trading at $25 per share. Pfiler also decided in May of 2020 to purchase a car for Jane to use. They purchased her a car at a cost of $70,000 on June 1 2020 and Jane had use of the car for the remainder of 2020. During that time the company paid the operating costs ($12,045) but insisted that Jane keep a log of usage and that she reimburse the company $1 for every personal km she drove, which she did on December 31. Her log for the year shows the following: Total KM driven 28,000 Employment related KM 25,000 . Jane also wanted to earn a little extra income so in 2018 she begin a home based business of selling furniture her brother would construct for her, he name of the business was AAA Furniture. For the taxation year ending December 31, 2020, her bookkeeper has determined that AAA had accounting income before taxes, determined in accordance with generally accepted accounting principles, of $168,000. In determining her business income for tax purposes, the following information is relevant: 1. The accounting income figure included a deduction for amortization of $21,000. 2. On January 1, 2020, AAA had the following UCC balances: Class 1 (small Building Acquired In 2018) $75,000 Class 8 $3,000 Class 10 $ 11,000 3. During 2020, AAA spent $6,000 landscaping the grounds around its building. This amount was recorded as an asset in the accounting records amortized for accounting. 4. AAAs 2018 accounting income included a deduction for meals and entertainment of $1,600. 5. AAA's 2018 accounting income included a deduction for equipment Jane purchased for $5,500. Her bookkeeper told her she expensed these items to make it easier to do the books. the books. 6. Late in 2020, Jane decided to sell the building to her friend and then lease it back to continue the business. She sold the building for $215,000, a good return considering she purchased it originally for $135,000. No land needs to be considered as Jane never put the value of the land in the business. All the equipment inside the building remains with Jane. Jane inherited a rental property in 2006 from her uncle who passed away. At time of the inheritance the property was valued at $100,000, of which $6,000 was land. Jane has been renting out this property since 2006. On January 1, 2020, the UCC on the building, class 1, was $42,000 and over the years Jane had purchased appliances and the UCC on those on January 1, 2020, class 8, was $10,700. (Assume building are class 1, 4%) During 2020, Jane provided you with the following information regarding the rental property She sold the building on June 30th for $150,000, of which $10,000 was allocated to land and $2,000 for appliances. She purchased a new rental on July 1 for $250,000, of which $25,000 was for land and $15,000 for appliances. For the year, the total net rental income before CCA was $28,600 on the two properties. Finally, Jane informs you that she has some shares in a small family owned business in Vancouver that she inherited from another uncle back in 2002. Each year this business pays out a dividend to its shareholders and for 2020 they informed Jane that she received $10,000 and she said they told her to tell you that the dividend is a non-eligible dividend. Jane is coming on Saturday for the meeting and she said she needs to know her Taxable income for 2020 and would like to see how you calculated it