Question for Taxation 2

taxation ||

In the following three cases, one or more taxpayers receive dividends from a private company. Por cach taxpayer, determine whether the dividends received will be classified as Split Income Explain your conclusion CASE A Betty owns 70 percent of Parkland Inc, a Canadian private corporation involved in manufacturing. Her common law partner Joan owns the remaining 30 percent of the shares. All of the shares have the same market value and voting rights. Both Betty and Joan are in their mid-405. Since the inception of the business in 2016. Betty has devoted all of her working time to the business, averaging more than 50 hours per week. Joan has a thriving accounting practice and has never worked in Parkland's operations. During 2019. Parkland pays a total dividend of $150,000, with $105,000 going to Betty and $45,000 going to Joan CASE B Duggan is a Canadian private corporation that has operated a manufacturing business since 2011. During the period 2011 tlirough 2018 all of the shares were owned by Melvin Younger. Also during this period, Melvin's son Bobby worked full time in the business, receiving a salary that was sufficient for him and his family to live comfortably. In late 2018, Melvin concludes that the business would benefit from his son having an MBA In keeping with this view. in January 2019, Bobby enrolls in an executive MBA program that will require two years to complete. In order to provide income for his son now that he is no longer working in the business. Melvinhas Duggan issue to Bobby a new class of shares that do not vote. During 2019, these shares pay dividends to Bobby totaling SI 50,000 QUESTION TWO Deborah Marx operates an unincorporated business which, during the taxation year ending December 31, 2018 has net business income of $28,000 and a taxable capital gain of $6,500 [(1/2)($13,000) In 2019, her business has a net loss of $85,000. In addition to this loss, a capital asset disposition results in an allowable capital loss of $10,800. Deborah has no other sources of income or deductions in either year. Assume that she wishes to minimize her net capital and non-capital loss carry overs at the end of 2019, without regard to her ability to claim her tax credits for the preceding year (2018). Calculate her Net Income For Tax Purposes and Taxable income for 2018 and 2019 and any amended amounts for 2018. Indicate the amount and type of any losses available for carry forward at the end of 2019. QUESTION FOUR Complete Assignment Problem Twelve-10 (from the Text) NOTE: You do NOT need to calculate CCA. The resulting calculations are provided below: Summary of CCA And UCC Results (excluding recapture & terminal losses) Class Maximum CCA UCC Class 1 - Toronto HQ Building $ 119,496 $1,816,104 Class 1 - Oshawa Building 119.700 1,077,300 Class 13 - Leasehold Interest 42.125 226,875 Class 14.1 6,000 74,000 Class 53 - Manufacturing Equipment 1,087,500 187,500 Class 54 - Zero-Emission Vehicles 340,000 Nil Total $1.714,821 QUESTION THREE For many years, Tamara Hung has had employment income in excess of $300,000. This will also be the case in 2019. During 2019, she has a $38.000 loss on the disposition of shares of a small business corporation. Also during this year, she has capital gains on publicly traded securities of $5,000. The only other year in which she experiences capital gains was 2011. In that year she had a capital gain of $8,000 on the sale of shares of a qualified farm property. She eliminated all of this gain with the lifetime capital gains deduction Determine the amount of the Allowable Business Investment Loss that can be deducted in 2019, as well as the amount and type of any losses available for carry over at the end of the year, QUESTION TWO Deborah Marx operates an unincorporated business which, during the taxation year ending December 31, 2018 has net business income of $28,000 and a taxable capital gain of $6,500 [(1/2)($13,000) In 2019. her business has a net loss of $85,000. In addition to this loss, a capital asset disposition results in an allowable capital loss of $10,800. Deborah has no other sources of income or deductions in either year. Assume that she wishes to minimize her net capital and non-capital loss carry overs at the end of 2019, without regard to her ability to claim her tax credits for the preceding year (2018) Calculate her Net Income For Tax Purposes and Taxable income for 2018 and 2019 and any amended amounts for 2018. Indicate the amount and type of any losses available for carry forward at the end of 2019