The objective of this assignment is for students to prepare a T$2$ Corporation Income Tax Return.

Use profile software

Barry and Robyn Adams formed Salcome Limited $("$SL$")$ on January $1,2019.$ The company sells

designer eye$-$glasses through its store in Oakville, ON$.$ SL has a December $31$ year$-$end.

Barry and Robyn have engaged you and your partner$($s$)$ to prepare the $2022$ T$2$ Corporation Income

Tax Return for SL$.$

Please submit only the following forms

$$ Form T$2$ Corporation Income Tax Return $("$Form T$2").$ At line $760$ of Form T$2,$ enter

$\text{'}$$$41,000\text{'}$ for the provincial or territorial tax.

$$ Schedule $1-$ Net Income $($Loss$)$ For Income Tax Purposes

$$ Schedule $8-$ Capital Cost Allowance $($CCA$)$

$$ Schedule $50-$ Shareholder Information

$1.$ The address of SL$\text{'}$s head office $($same as its mailing address$)$ is:

$106$ Lakeshore Boulevard

Oakville, ON

L$6$H $2$E$8$

The books and records have been maintained at the same address since the formation of the

company. SL$\text{'}$s business number is $856310047$ RC$0001$

$2.$ Barry and Robyn are resident in Canada for tax purposes and each individual owns $50\%$ of

the common shares of SL$.$ The company has not issued any preferred shares. The social

insurance number $($SIN$)$ for each shareholder is:

$$ Barry Smith $-506990397$

$$ Robyn Smith $-508487215$

$3.$ The authorized signing office of the corporation is the CFO, Zach Smith. His phone number

is $(416)978-9000$ and he is the contact person for matters relating to SL$\text{'}$s income tax

return.

$4.$ The controller of SL has prepared the accounting income statement for the year ended

December $31,2022$:

Salcome Limited

Income Statement

For the year ended December $31,2022$

Sales $ $1,658,000$

Cost of sales $ $650,000$

Administrative expenses $425,0001,075,000$

Operating income $ $583,000$

Other income and expenses $225,000$

$ $808,000$

Provision for income taxes $121,200$

Net income $ $686,800$

$5.$ The following items were included in the calculation of "Administrative expenses":

a$.$ Interest on late income tax payments of $$210.$

b$.$ Donations to various registered charities of $$15,000.$

c$.$ Depreciation and amortization tangible assets of $$98,000.$

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$6.$ The following items were included in the calculation of "Other income and expenses":

a$.$ Gain on sale of Bell Canada shares that were purchased for $$80,000$ and sold for

$$98,000.$

b$.$ Accrued bonuses of $$14,000$ that was paid on January $3,2023.$

c$.$ Interest income on overdue accounts receivable of $$1,250.$

d$.$ Reserve for warranty claims of $$5,000.$ The actual warranty claims for the year

amounted to $$8,500.$

e$.$ Dividends from taxable Canadian corporations $($non$-$connected$)$ of $$13,000.$

f$.$ Dividend from ABC Co $($a connected corporation$)$ of $$10,000($as described under

item $7$ below$).$

g$.$ Toronto Maple Leafs hockey game tickets given to customers of $$3,000.$

$7.$ SL owns $90\%$ of the common shares in the capital stock of ABC Co$.$ and has allocated

$$105,000$ of the business limit to ABC Co$.$ SL received a $$10,000$ non$-$eligible dividend from

ABC Co$.$ during $2022.$ ABC Co$.$ received a dividend refund from its NERDTOH of $$1,700$ as a

result of paying the dividend.

$8.$ The balances in the tax accounts as at January $1,2022$ were:

a$.$ Non$-$capital losses carried forward of $$34,000.$

b$.$ Net capital losses carried forward of nil.

c$.$ NERDTOH balance of $$2,500.$

$9.$ The $2021$ income tax return shows the following account balances from Schedule $8$:

Depreciable property $-$ UCC

Class $832,000$

Class $1078,000$

Class $122,500$

$10.$ On May $31,2022,$ fixtures and equipment were sold for proceeds of $$15,000($the original

cost was $$35,000).$

$11.$ A delivery truck was purchased at a cost of $$85,000$ plus HST$.$

$12.$ As at December $31,2022,$ there are assets remaining in each of the three CCA classes.

$13.$ SL paid a $$25,000$ non$-$eligible taxable dividend on December $31,2022.$

$14.$ SL made installments totaling $$138,000$ in respect of its $2022$ taxation year.

$15.$ In the previous year the adjusted aggregate investment income was below $$50,000$ and the

taxable capital of the associated group was below $$10,000,000.$