The following information is taken from the financial statements and audit working papers of Walmart Corporation for its fiscal year ended December 31, 2020.

Walmart Corporation

Condensed Unaudited Income Statement

For the Year Ended December 31, 2020

Sales $22,250,650

Cost of goods sold (16,150,425)

Gross profit $ 6,100,225

Selling expenses $1,895,955

General and administrative expenses 3,396,231 (5,292,186)

Net income before provision for income taxes $ 808,039

Provision for income taxes current $410,125

future 225,591 (635,716)

Net income after tax $ 172,323

The following items were deducted in arriving at the above net income:

1. Golf club membership fees in the amount of $5,600 were paid for the sales manager who used

the club regularly to close sales.

2. A number of years ago, the company issued a bond at a discount. They have been amortizing

this discount at the rate of $6,500 per year ever since, including this year.

3. Walmart had a dispute with one of its major suppliers over the use of the supplier's product.

As a result of a court decision, the supplier was awarded damages for breach of contract in the

amount of $25,495.

4. During the year, the company bought the shares of another company. In completing this

transaction, legal fees of $12,500 were incurred.

5. During the year, a warehouse worker managed to remove valuable inventory worth $9,875

during the night shift by taking it out in his lunch box.

6. A life insurance policy was taken out on the president's life in order to provide funding for the

company in the event of his death. Life insurance premiums on this policy amounted to $8,900.

7. During the year, they borrowed to buy new equipment. The interest expense related to this

was $24,569.8. Charitable donations were made in the amount of $16,000.

9. The December holiday banquet for the employees cost $35,000.

10. Late in the year, it became apparent that during the next year new competitive products would

come on the market which would drive the price of Walmart's products down. They expect

this decline to take place in about six months. As a result, they decided to set up a reserve for

a decline in the inventory value in the amount of $38,125. They have never set up this kind of

reserve before.11.Because Walmart's products come back for repair under their warranty program, they set up a

reserve for this expense on their financial statements. Last year the reserve was $49,500. This

year they increased the reserve to $98,781.

12.Management bonuses of $135,000 were accrued at December 31, 2020 ($49,995 was not paid

until June 30, 2021 due to lack of sufficient funds).

13. Instead of borrowing money at the bank, the company decided to pay their income tax

instalments late. This resulted in an interest charge from the Canada Revenue Agency in the

amount of $2,390.

14. Business interruption insurance premiums of $15,325 were paid to protect the company in

the event a fire forced them to close for a period of time.

15.The sales manager incurred expenses related to meals and entertainment at the golf club in the

amount of $4,320.

16. In order to raise money for expansion, the company mortgaged the real estate it used in the

business. It incurred accounting fees of $35,000 and appraisal fees of $12,000 related to this

financing. The mortgage has a 10-year term and a 30-year amortization period.

17. Computer software costing $17,500 related to word processing was expensed because they

always bought the upgrades each year.

18. Amortization expense on the fixed assets was $1,386,525.

An examination of the capital cost allowance schedule for 2020 provided the following opening

balances for the undepreciated capital cost for each class of EASI's assets:

The following additional information was found in the 2020 fixed asset schedules working paper files.

Class 1 building .................................................. $5,333,383

Class 8 office furniture and equipment............... 1,600,000

Class 10 trucks for transportation of goods .......... 800,000

Class 12 small tools .............................................. 5,100

Class 13 leasehold improvements......................... 354,167

Class 44 Patent and rights limited life .................. 190,000

1. The building which cost $6,000,000 was sold for $5,100,000. It was the only building in

Class 1 at the time of its sale. A new building was purchased (non used) in April 2020 for

$7,500,000. Also, in February 2020 a lot adjacent to the new building, was purchased for

$525,000 for use as a parking lot by employees and visitors. This lot was paved at a cost of

$45,000. A fence was erected around an outside storage area near the new building at a cost

of $60,000.

2. New office furniture was purchased for $80,000. This purchase replaced old assets which

were sold for $45,000. None of the old assets was sold for more than capital cost.

3. Three small trucks purchased in 2015 for $32,000 each were traded in for three new trucks.

Each new truck was priced at $55,000, but this was reduced by a trade-in credit of $22,500

for each old truck.

4. Some small tools were sold for a total of $25,000. All of these tools were sold at a price less

than their capital cost.

5. Leasehold improvements had been made to a leased warehouse at a cost of $425,000 in

September 2018. The remaining length of the lease in that year was six years with two

successive renewal options of three years each. Further leasehold improvements were made to

this warehouse in 2020 at a cost of $121,000.

6. During 2020, an unlimited life franchise was purchased for $68,000.

7. Accounting gains and losses on the above asset sales netted to nil.

Required:Based on the foregoing information, compute the minimum income from business for tax purposes for Walmart Corporation in respect of its 2020 fiscal year. In addition, comment on the items not included in your calculation of income from business.