PROBLEM SEVEN Riley Fontaine has requested that you review the calculation of his 20X1 net income for tax purposes. He has provided you with the following information: 1. His salary consists of the following: Basic salary Bonus $92,000 6,000 $98,000 The bonus of $6,000 was awarded to him on December 31, 20X1, and was paid on January 15, 20X2. 2. His employer deducted the following items from his salary and remitted them to the appropriate party on his behalf: Canada Pension Plan Employment Insurance premiums Registered pension plan Income tax Charitable donations (United Way) $ 2,480 931 4,400 26,000 3,500 3. Fontaine is employed by Remco, a Canadian public corporation. Two years ago, Remco granted Fontaine an option to purchase 1,000 of its common shares at $16 per share. At the time the option was granted, Remco's shares were trading at the same value of $16 per share. On January 31, 20X1, Fontaine purchased 1,000 shares of Remco (trading value at purchase date-$22 per share). On November 30, 20X1, he sold all of the shares at $24.