Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

SPORTCO is a CCPC that operates only in Canada, and all of its shares are owned by C line Chalifoux. The income statement for its

SPORTCO is a CCPC that operates only in Canada, and all of its shares are owned by Cline Chalifoux. The income statement for its 12-month fiscal year ending December 31 of Year 10 shows the following items:
Operating Profit: $600,000
Other Income:
Interest on Portfolio Investments: $25,000
Interest on Customer Accounts: $12,000
Non-taxable Dividend from FILS: $15,000
Non-taxable Dividend from PRIVCO: $1,000
Taxable Dividend from PRIVCO: $8,000
Gain from the Sale of PUBCO Shares: $42,000
FILS is a CCPC owned 60% by Cline's son and 40% by SPORTCO.
For its fiscal year ending December 31 of Year 10, FILS reported taxable income of $100,000 consisting only of ABI for which it claimed the Small Business Deduction (SBD).
During the year, FILS paid its shareholders a non-taxable dividend. Despite these dividend payments, FILS did not have a Refundable Dividend Tax on Hand (RDTOH).
PRIVCO is a CCPC. SPORTCO owns 5% of PRIVCO's shares. Ms. Chalifoux is not related to the other shareholders of PRIVCO.
For its fiscal year ending December 31 of Year 10, PRIVCO reported taxable income of $700,000, including $200,000 of ABI for which it claimed the SBD.
During the year, PRIVCO paid a non-taxable dividend and a taxable dividend. Following these dividend payments, PRIVCO received an RDTOH of $6,000.
Finally, Ms. Chalifoux's spouse is the sole shareholder of CONJOINT, a CCPC. For its fiscal year ending December 31 of Year 10, CONJOINT reported taxable income of $125,000 consisting only of ABI for which it claimed the SBD.
Apart from the dividend payments, there are no other transactions between the different companies, i.e., SPORTCO, FILS, PRIVCO, and CONJOINT. The combined taxable capital and adjusted aggregate investment income of all associated companies have always been less than $10 million and $500,000, respectively.
SPORTCO wants you to take all measures to reduce its tax burden for Year 10.
presenting the details of your calculations.
1.Calculate the active business income (ABI) of SPORTCO for its fiscal year ended December 31, Year 10.
2.Calculate the total investment income of SPORTCO for its fiscal year ending December 31, Year 10.
3.Calculate the net income of SPORTCO for its fiscal year ending December 31, Year 10.
4.Calculate the taxable income of SPORTCO for its fiscal year ending December 31, year 10.
5.Calculate the income of SPORTCO which benefits from the eligible small business deduction (DAPE) in the calculation of its tax for the fiscal year ended December 31 of year 10.
6.Calculate the income of SPORTCO which is subject to the additional Part I tax in the calculation of its tax for the fiscal year ended December 31 of year 10.
7.Calculate the income of SPORTCO which benefits from the general tax reduction (RIG) in the calculation of its tax for the year ended December 31, year 10.
8.Calculate the refundable portion of Part I tax (FRIPI) of SPORTCO for the year ended December 31, year 10.
9.Calculate SPORTCOs Part IV tax for the year ended December 31, Year 10.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Fundamental accounting principle

Authors: John J. Wild, Ken W. Shaw, Barbara Chiappetta

21st edition

1259119831, 9781259311703, 978-1259119835, 1259311708, 978-0078025587

More Books

Students also viewed these Accounting questions

Question

1. Avoid listening to tattle tale stories about students.

Answered: 1 week ago