Quantro Enterprises Ltd. and Baizley Holdings Ltd. (BHL) are both 100% owned by Harold Baizley. Both companies are Canadian-controlled private corporations. Quantro operates a wholesale business and pays rent to BHL for the use of a warehouse property.

BHL owns only one assetthe warehouse building and related land that is rented by Quantro for $43,600 per year. The property was originally owned by Quantro but was sold to BHL several years ago as a means to reduce the risk exposure of this appreciating asset.

On December 31, 2020 (the year end of both companies), BHL sold the warehouse property to a third party for $447,700 (land $48,400, building $399,300). The property originally cost $387,300 (land $30,300, building $357,000).The undepreciated capital cost of the building at December 31, 2019, was $307,300.

One month before selling the warehouse property, BHL purchased a newly constructed warehouse property for $580,800. (land $60,500, building $520,300.).

Required:

Determine BHLs net income for tax purposes for 2020.

Lia Wright is the sole shareholder of Newgardens Ltd. (NGL), a Canadian-controlled private corporation. The corporation holds investments in shares, bonds, and real estate. You have been retained to complete NGLs tax return for the year ended December 31, 2020, and provide certain other tax advice.

It is now February 15, 2021, and you have gathered the information outlined below.

1. The draft income statement for the year ended December 31, 2020, is as follows:

Income
Interest on bonds and certificates	$94,400
Dividend income	40,000
Net loss from real estate rentals	(19,000)
Gain on sale of land (Stoney Lake)	205,700
Share of profits of Rare Products Ltd.	145,200
Less Expenses
Legal fees for general corporate affairs	(1,200)
Directors fees	(25,400)
Donationscharitable	(9,700)
Income before income tax	$430,000

2. NGL owns a 40% interest in Sharlet (a partnership), which has a June 30, 2020, year end. The partnerships profit for the year was $242,000, which consisted of dividends from taxable Canadian corporations of $96,800 and royalties from mineral rights of $145,200. On December 31, 2020, NGL received $100,000 as its share of a partnership cash distribution. The partnerships results are not reflected in the above income statement.

3. On September 30, 2020, NGL purchased a $100,000 guaranteed investment certificate bearing 7% interest. The company intends to record the interest of $7,000 on September 30, 2021, its one-year anniversary date.

4. The dividend income of $40,000 consists of the following:

Canadian Public corporations	$22,000
Turner Inc.an American corporationnet of a 10% U.S. withholding tax	18,000

Not included in the above is a dividend received from Rare Products Ltd. of $35,000. NGL owns 50% of its voting shares and records the investment using the equity method of accounting. Rare earned business income of $240,000 in the current year.

5. During the year, NGL received 100 shares of Herford Ltd. (a public corporation) as a stock dividend. Herford increased its paid-up capital by $40 for each stock dividend share issued. NGL did not record the receipt of the stock dividend.

6. In January 2020, NGL purchased three hectares of land on Stoney Lake for $157,300. The land was then rezoned and subdivided into six building lots. The entire subdivision was immediately sold to a building contractor for $363,000. The payment terms called for no cash down, but payments of $60,500 are required as the contractor completes construction on each lot. By December 31, 2020, one payment of $60,500 had been received.

7. In 2019, NGL had purchased two rental properties as follows:

	Land	Building	Total
Fourplex	$50,000	$150,000	$200,000
Townhouse #1	20,000	40,000	60,000
	$70,000	$190,000	$260,000

Maximum capital cost allowance was claimed in 2019.

In 2020, townhouse 1 was sold for $75,000 (land $25,000, building $50,000).

On December 1, 2020, NGL purchased townhouse #2 for $50,000 (land $11,000, building $39,000). Also, in 2020, NGL constructed a sixplex rental unit for $437,000, as follows:

Land	$ 80,000
Permanent landscaping	8,000
Labour and materials	300,000
Air-conditioning and heating equipment	49,000
	$437,000

All of the properties resulted in a net rental loss of $19,000 (as shown on the financial statement). The following items are included in the net loss calculation:

Cost of surveying land (new sixplex)	$ 2,400
Amortization/depreciation	28,000
Legal fees for mortgage (new sixplex)	2,000
Advertising for new tenants	4,000

Required:

Determine NGLs net income for tax purposes for 2020. Also, prepare a breakdown of the net income for tax purposes showing the net income from property and any other sources of income. Assume all rental properties are residential properties.