t is February, 2021. Threemembers of the Blendin family(Candace, James and Susan)have all asked you to determine their taxable income and Federal incometax payable for 2020. Eachof these taxpayers would like to minimize the amount of income tax they must pay. In preparing their income tax information, you must include all your calcualtions, even if the result of your calculation is zero or nil. For this question, you may ignore GST/HST/PST.CandaceBlendinand her second husband, James,live in Nanaimo,BC with three of theirchildren, Patrick, Carolina, and Ben. They moved to Nanaimofrom Tofino, BCon September 1, 2020so thatJamescould study accounting as a full-time student atVancouver Island University. Candaceis the sole owner ofa retail beach wearstore in Tofino, Surf's Up. She has chosen not to sell the storeas she has an excellent store manager and she is able to visit Tofinoregularly to assist with things.Following is information required to prepare thetax returns for Candace, James, and their familyfor2020:1)During 2020, Candacereceived$6,300in non-eligible dividends and $29,800in eligible dividends.2)When the family decided to move to Nanaimoin 2020, theirhome in Tofinowas sold privately by James for $250,000.The original cost of the home was $175,000. Neither James nor Candace have owned any other property.3)Prior to the move to Nanaimo, Candacelisted several items on Kijiji, and was successful in finding buyers for the following items: Adjusted Cost BaseProceeds of DispositionCollector Car$45,000$61,000Painting 80013,000Antique Furniture21,00012,000Jewellery 32,00026,000Using some of the proceeds from her Kijiji sales, Candacepaid $70,000 of instalments for income taxes for the year.4)Candaceis divorcedfrom her formerhusband, John. The originalwritten divorceagreement requiredCandaceto make payments for the supportof Johnand their son, Chris, who lives with John. Payments were set at $400per month for Johnand $300per month for Chris. Paymentsaremade on the first day of each month, andJohnhas complete discretion as to their use. Effective June 1, 2020, the agreement was changed to increase the payments toJohnand Christo $500 per month and $400 per month, respectively. In order to help Johnwith winter holiday expenses, Candacemade the payment for January 1, 2021on December 10, 2020.No payments were missing or delayed for 2020. 5)The family incurred the following costs with respect to themove from TofinotoNanaimo:Packing and transport of household goods$7,300Travel -Candace, James,and threechildren-gas costs only-210km160Both Candaceand Jamesdrove their vehicles, at a cost of $80 per carLegal fees -purchase of house in Nanaimo950Legal fees -sale of house in Tofino850Hotelin Nanaimowhile waiting for new house, at $205per day6,150House-hunting trip (prior to purchase of home)400It took one full day for the family to move from Tofinoto Nanaimo, including packing their household goods and vehicles. James and Candace would like to use the simplified method to calculate their moving expense deduction. You may assume that the moving rates have not changed since 2019. 6)Living with Candaceand Jamesare twochildrenthey have had together, Carolina(5) andBen(8). Also living with them is Patrick(12), who is one of Candace's children from her first marriage to John. Patrickis classified as disabled for tax purposes. The children attend before and after school care for 44 weeks per year at a total cost of $575per week. In addition, Patrickattends a summer camp for childrenwith disabilitiesfor 4 weeks each year at a total cost of $10,000.During the 4 weeksthat Patrickis at camp,Carolinaand Benare looked after by Susan, James' daughter from his previousmarriage. Susan(16)lives with her mother most of the time butlives with Jamesand Candacefor this one montheach year. In 2020Jamespaid Susan$450per week to take care of Carolinaand Ben. The children look forward to their time with Susan, as shealwaysplans a lot of fun activities and outings with them. Susandoes not have any other income.Every year Candaceand Jamestake 4 weeks off work and spend this time with the three children. They do not require childcare for these weeks. 7)When Susangraduates from high school next year, she would like to go to college andget training to become a fingernail technician. Originally, she had considered following in her father's footsteps to pursuea career in accounting but realized that she would get better tips working in the beautyindustry.In 2018Jamesdecided to help Susanby investing in a $3,000 one-year GIC in Susan's name. On the GIC'smaturity in 2019, Susanrolled the $3,000 into another GIC for one year and rolled the interest earned during the first year into a second one-year GIC for $300.In 2020, the interest earned on the two GICs was $240 and $24 respectively.Again, Susanreinvested these amounts inseparate one-year GICs.8)Candaceowned shares of two publicly traded companies. TriStarLimitedhad an adjusted cost base of $10,000and GlobalInc. had an adjusted cost base of$200. On July 1, 2020, Candacegave the TriStar Limited shares to Jamesas a birthday giftand did not elect out of the spousal rollover.At that time, the shares had a fair value of $12,000.Jamesreceived a cheque for $100 of eligible dividends in September 2020. He sold the shares on October 31 for $15,000. Candacesold the GlobalInc. shares on the open marketon December 1, 2020for $2,500.9)Jamesearnedemployment income of $150,000 in Tofinoup to August 31, 2020.From this he had $15,000 of income tax and maximum CPP and EI deducted. After the move, he obtained a part-time job as a server inan upscale Nanaimorestaurant, where he earned $12,000 between September 1 and December 31, 2020. On the restaurantpay, CPP of $568($32of this is the enhanced CPP amount), EI of $190and income tax of $875were deducted. 10)James was enrolled as a full time student at Vancouver Island Universityfor 16 weeks during 2020. Hepaid his fall term tuition feesof $9,968on August 15, 2020.11)During 2020, Jamespaid $2,500 for prescription medications for himself, $3,200 for cosmetic surgery for Candace, and $5,600for dental braces for Susan. 12)Surf's Upis a retailer of all kinds of beachclothing and accessories that has been operating in a leased store in a strip mall in Tofinofor about 10 years. On January 1, 2020, Surf's Uphad the following UCCbalances:Class 8$5,700Class 1012,627Class 10.112,495Class 126,000Class 1344,687During 2020, the cost of additions to Class 8 were$22,200, while the proceeds ofdisposition totaled $33,000. One of the assets was disposedoffor$4,000 more than its original cost. All other assets were disposed of forless that their original cost. Total proceeds for the assets was equal to the carryingvalue of the assets disposed of. There were still assets in the class onDecember 31, 2020.The only non-passenger vehicle owned by Surf's Upwasa delivery van with an original cost of $47,000. This vehicle was sold on December 31, 2020for its carryingvalue of $5,000. It was replaced on January 5, 2021with a new leased van. Surf's Upalsoowned a Lexus 150 that had an original cost of $85,000, and a carrying value of $51,000. During 2020, this vehicle was totalled in an automobile accident. Candacereceived $45,000 from the insurance company, equal to the car's carryingvalue, and during 2020, she purchased a new Mercedes for $65,000.All of the Class 12 assets were acquired in 2019.A four-year lease was signed on the store's rental space in 2018. This lease allows for two additional renewals of fouryears each. At the signing of the lease, leasehold improvements were made at a cost of $55,000.In 2020, additional leasehold improvements were made, including $9,000 in renovations inside the store and $3,000 in landscaping around the outside of the store. The businesshas a policy to always deduct the maximum amount of CCA.13)Surf's Up'scondensed income statement for its year ended December 31, 2020, showedthe following:Surf's UpBeach WearCondensed Income Statement-UnauditedFor the Year Ended December 31, 2020Sales$ 2,082,000Cost of sales(1,439,000)Gross profit643,000General and administrative expense(279,000)Other(54,000)Income before income taxes$310,000An analysis of the cost of sales account revealed that the inventory was valued at average cost within each of the different styles carried.A'mark-down rack'at the back of the storeis very popular with customers. At December 31, 2020, the tagged prices of the mark-downs wereless than their costsby $900. This difference hadnot been recorded in the financial statements.General and administrative expenses include the following:The company paid the following amounts to Great LifeInsurance Limited during the year:Group term life insurance for the four full-time employees$1,500$200,000 term life insurance policy on Candace's life, which wasincluded in the "Insurance" expense account1,200$2,700Surf's Upis the beneficiary of the term life insurance policy on Candace. Thispolicy was assigned to the bank as collateral for a $500,000 loan from January 1 through August 30, 2020. The loan was repaid on Sept. 1, 2020and was replaced withan operating line of creditfor which no collateral was required.The following selected information was taken from the "Promotions" account:Charitable donations to the TofinoUnited Way$ 4,900Meals at Christmas luncheon for all full-time and part-time staff750Gift cards to local shopping mall -given as Christmas gifts to staff2,500Hockey tickets given to suppliers as Christmas gifts2,800Meals incurred by the owner while negotiating with suppliers5,000Restaurant costs for two customer appreciation fashion shows8,000Account total$ 23,950`The company's "Professional expense" account included the following legal and accounting fees:Accounting fees for year end work and monthly bookkeeping $ 10,000Legal fees with respect to lawsuit(see details below)10,000Legal and accounting fees incurred in negotiating a line of credit at the bank8,000Account total$ 28,000Candacewas in a traffic accidentwhile driving her personal vehicle. Shespent one monthrecouperating in hospital during 2020.She sued the driver of the other car for damages incurred. Additionalexpenses deducted in the financial accounting calculationof income include:Depreciation and amortization$ 25,000Interest on the loan and operating line of credit5,500Damages paid under a breach of contract lawsuit initiated by a supplier1,500Total$ 32,000