Question 4

Mr. Dalip Bourne provides you with the following financial information for the years 2018 through 2021.

information for 2018

During this year, Dalip starts a new business which, during its first year of operations, has business income of $19,800. In addition, because of his love of the outdoors, he begins to carry on a farming business on a part time basis. The farming business experiences a loss of $10,800 in its first year of operation. Using the proceeds of an inheritance, he makes a number of investments in common shares during the year. In 2018, these investments pay $1,880 in eligible dividends. As the result of dispositions in the year, he realizes $1,330 in capital gains and $4,640 in capital losses.

information for 2019

This year Dalip's business has a business loss of $15,300. However, the farming business reports income of $2,200. Also, during 2019, he receives $2,348 in eligible dividends and realizes capital gains of $2,100. He has no capital losses during the year.

information for 2020

Dalip;s business income for the year is $32,800. in addition, the farming business reports income of $3,465. He receives eligible dividends of $3,170 and realizes capital gains of $4,200. Once again, no capital losses are realized.

information for 2021

Dalips business experiences a business loss of $21,300. In addition, his farming business has a loss of

$2,100. Although he receives $5,130 in eligible dividends, he is forced to sell some investments for much needed funds and realizes capital gains of $4,920 and capital losses of $15,940.

Because of the nature of his farming activities, Dalip's farm losses are restricted. All of the dividends received are from taxable Canadian corporations.

When he has a choice, he would like to deduct the maximum amount of any net capital loss carry overs and carry back any losses to the earliest possible year. Prior to 2018,

Dalip was a full-time student with no federal income tax payable. This means that it would not be useful to carry back any type of loss to years prior to

2018.

Dalip requires $15,300 in taxable income in each year to fully utilize his available tax credits. In applying carry over amounts, Dalip's Taxable Income should not be reduced below $15,300.

Required

Calculate Dalip's minimum Net Income for Tax Purposes and Taxable Income for 2018.

(Round your answers to the nearest dollar.)

The 2018 net income is

$____________ , and the 2018 taxable income is $________None of the losses can be carried back before 2018, so a 2018 restricted farm loss of $__________and a 2018 net capital loss of $________can be carried over.