1. Sharma Inc. has determined that, for the current year, it has Taxable Income before the deduction of CCA of $14,000. At the end of the year, before the deduction of CCA, the following UCC balances are present:

Class 1 (Buildings Acquired In 2006) $213,000

Class 8 16,000

Class 10 42,000

There have been no additions to or dispositions from these classes during the year. It is the policy of the Company to limit CCA deductions to an amount that would reduce Taxable Income to nil. Given this policy, which class(es) should be charged for the $14,000 of CCA that will be required to reduce Taxable Income to nil? Explain your conclusion.

2.At the beginning of 2020, Quest Inc. has two assets in Class 10. The cost of each asset was $72,000 and the Class 10 UCC balance was $56,472. On June 30, 2020, both of these assets are sold for a total of $41,500. What is the effect of the disposition on the Company's 2020 net business income? In addition, determine the January 1, 2021 UCC balance.

3.On February 28, 2019, a new Canadian corporation is created by issuing $12,200,000 in debt securities and $2,500,000 in common shares. The debt securities pay interest at 9 percent. The corporation has elected a December 31 year end. Of the securities issued by the new corporation, one-half of the debt securities and $1,000,000 of the common shares are acquired by Nathalie Bergeron, a resident of France. As of January 1, 2020, the Retained Earnings balance of the corporation is $560,000. How much, if any, of the interest paid in 2020 on Ms. Bergeron's holding of debt securities would be disallowed under the thin capitalization rules in ITA 18(4)?

4.During the current year, Jonathan Beasley has the following costs:

Utility Costs For Home $2,500

Maintenance And Repairs For Home 3,100

Property Taxes For Home 5,400

House Insurance 1,300

Interest On Mortgage 4,600

Home Telephone Monthly Charge 600

Separate Line To Home Work Space Monthly Charge 480

Employment/Business Related Long Distance Charges 560

Home Internet Service Fees 720

Mr. Beasley estimates that he uses 18 percent of his residence and 30 percent of his home internet service for employment/business related purposes. Maximum CCA on 100 percent of the house would be $12,000. Determine the maximum deduction that would be available to Mr. Beasley assuming:

A. He is an employee with $72,000 in income (no commissions).

B. He is an employee with $72,000 in commission income.

C. He is self-employed and earns $72,000 in business income.

5.For a number of years, Ms. Alexandria Bouclair has operated an unincorporated business. Because of a growing need to travel for this business, on September 1, 2020, she acquires an automobile that will be used 100 percent for business. The cost of the automobile is $63,000, of which $50,000 is financed by the dealer. Interest charges for the period September 1, 2020 through December 31, 2020 total $2,000. What amounts can Ms. Bouclair deduct in her 2020 tax return with respect to this acquisition? Ignore GST and PST considerations.