Tax SOT Tax Software Assigninent Problem Eleven - 1 This problem is an expansion of the Chapter 4 problem. to real persons, living or dead, is purely coincidental. DISCLAIMER: All characters appearing in this problem are fictitious. Any resemblance most of his working life as a pianist and song writer. He and his family live at 111 WWW Street, Mr. Buddy Musician (SIN 527-000-061) was born in Vancouver on August 28, 1952. He has spent Vancouver, B.C. V4H 3W4, phone (604) 111-1111. Mr. Musician's wife, Natasha (SIN 527-000-129), was born on June 6, 1994. She and Mr. Musi- 2005. Donna, 2016; and Donald, 2017. Natasha's only income during 2019 is $3,200 from singing engagements Buddy and Natasha Musician have two adopted children. Richard (SIN 527-000-285) was born Sto March 15, 2002, and has income of $2,800 for the year. Due to his accelerated schooling, he started full time attendance at university in September of 2019 at the age of 17. His first semes- ter tuition fee is $3,000 and he requires books with a total cost of $375. These amounts are paid by Mr. Musician The other adopted child, Sarah, was born on September 2, 1999 and is in full time attendance at university for all of 2019 (including a four month summer session). Her tuition is $9,600 and she requires textbooks that cost $750. These amounts are also paid by Mr. Musician. Sarah has no income during the year. Neither Richard nor Sarah will have any income in the next three years. They both have agreed that the maximum tuition amount should be transferred to their father. Tax Software Assignment Problems Mr. Musician's mother, Eunice, was born on April 10, 1932, and his father, Earl, was born on November 16, 1930. They both live with Mr. Musician and his wife. While his father has some mobility issues, he is not infirm. His mother is legally blind. Eunice Musician had income of $9,500 for the year, while Earl Musician had income of $7,500. Other information concerning Mr. Musician and his family for 2019 is as follows: Mr. Musician earned $ 16,500 for work as the house pianist at the Loose Moose Pub His TA showed that his employer withheld $500 for income taxes and $287.30 for El. No CPP was withheld as he has previously filed an election to stop contributing to the CPP. 2. During the year, Mr. Musician made his annual $3,000 donation to Planned Parenthood Of Canada, a registered Canadian charity. 3. Mr. Musician has been married before to Lori Musician (SIN 527-000-319). Lori is 52 years old and lives in Fort Erie, Ontario. 4. Mr. Musician has two additional children who live with their mother, Ms. Dolly Nurse (SIN 527-000-582), in Burnaby, British Columbia. The children are Megan Nurse, aged 12, and Andrew Nurse, aged 14. Neither child has any income during 2019. While Ms. Nurse and Mr. Musician were never married, Mr. Musician acknowledges that he is the father of both children. Although Buddy has provided limited financial aid by paying their dental and medi- cal expenses, the children are not dependent on Buddy for support. 5. Mr. Musician wishes to claim all his medical expenses on a calendar year basis. On Decem- ber 2, 2019, Mr. Musician paid dental expenses to Canada Wide Dental Clinics for the fol- lowing individuals: Himself $1,200 Natasha (wife) 700 Richard (adopted son) 800 Sarah (adopted daughter) 300 Linda (daughter) 100 Earl (father) 1,050 Lori (ex-wife) 300 Dolly Nurse (mother of two of his children) 675 Megan Nurse (daughter of Dolly Nurse) 550 Total $5,675 6. Mr. Musician signed a contract with Fred Nesbitt on January 13, 2019, to do permanent modifications to his house. The contract was for the installation of ramps with sturdy hand railings outside his front and back doors to give his parents easier access to the house and modifications to their bathroom so they would be less likely to fall when using the shower. The contract price was $5,800. As neither of his parents has a severe and prolonged mobil- ity impairment, these expenditures are not eligible medical expenses. 7. Mr. Musician paid four quarterly instalments of $1,000 each (total of $4,000) for 2019, as requested on his Instalment Reminders from the CRA. He paid each instalment on the due date. 8. Mr. Musician receives $7,271.67 in Old Age Security payments and $5,500 in Canada Pen- sion Plan "retirement benefit" payments over 12 months. There was no tax shown as with- held on his T4A(OAS) or his T4A(P). 9. Mr. Musician builds a state-of-the-art home theatre in a new extension of his home. In order to finance it, he sells stock in his RRSP and withdraws the funds from his RRSP. His T4RSP showed $52,000 in withdrawals from the House of Rock Bank (Box 22) and total tax of $15,600 deducted from these payments. 10. Several of Mr. Musician's songs, including his outstanding hit "Drop Kick Me Jesus Through The Goal Posts Of Life have provided him with substantial royalty payments over the years. 568 Chapter 11 Tax Software Assignment Problems In 2019, the Never Say Die Record Company paid him $78,000 in royalty payments. No T5 was issued by the company. 11. In order to ensure the financial security of his family, Mr. Musician decided to return to song- writing in earnest. On November 1, 2019, he rented a small, quiet studio for $700 a month and purchased a Roland electric piano for $7,750 that was delivered there. He does not plan to use the space or piano for personal enjoyment, only for composing. 12. The previous year, on January 2, 2018, Mr. Musician elected not to make any further CPP contributions on his self-employed income. 13. Mr. Musician is required by a court order to pay spousal support of $400 per month to his former spouse, Lori Musician. Mr. Musician made spousal support payments of $4,800 dur- ing 2019. 14. Mr. Musician is required by a court order to make child support payments of $350 per month to Dolly Nurse for his two children, Megan and Andrew Nurse. A total of $4,200 was paid during the year. 15. Mr. Musician made contributions to the federal Liberal Party in the amount of $610 during the year. 16. Mr. Musician made a $5,000 contribution to his TFSA during the year. Thanks to the excellent investing advice of his gardener, the balance in his TFSA account has grown to more than $175,000 by the end of the year. Required: With the objective of minimizing Mr. Musician's Tax Payable, prepare Mr. Musician's 2019 income tax return using the Profile tax software program assuming Natasha does not file a tax return. List any assumptions you have made and any notes and tax planning issues you feel should be placed in the file