TR Ltd. is a Canadian-controlled private corporation operating a franchised retail and mail-order business in Vancouver. Denver Chan, the company's president, owns 100% of the corporation's share capital. The corporation was created on December 1, 2020. For the year ended November 30, 2021, TR Ltd.'s financial statement reported income before income taxes of $157,090. Yo rel: fini TF 1. Ap after March 18, 2007. On October, 15, 2021, the truck was involved in an accident. The damage was not repairable, and TR immediately signed an agreement with the insurance company to settle the claim for $31,000. The cash was received on December 10, 2021. Another truck was obtained under a lease arrangement. Amortization expense of $28,000 has been deducted from income. 2. Legal expense includes the following costs: Preparing annual corporate minutes Incorporation costs for TR Ltd. Negotiation of franchise agreement 3. Repairs and maintenance expense includes the following items: Paving the parking lot Cleaning and supplies Replacing a broken window 5. A contingent reserve for possible defective products of $5,000 is recorded as a charge against cost of sales. During the year, $3,000 of products were returned. 6. On May 31, 2021, TR invested $40,000 in a one-year bank certificate earning annual interest of 7%. TR intends to recognize the interest revenue upon receipt at its one-year anniversary date. 7. Interest expense includes $14,000 on the building mortgage and $700 from a temporary bank loan of $12,000. The bank loan funds were, in turn, loaned, without interest, to Y Ltd., a corporation owned by Denver's brother. Y Ltd. used all of its assets to operate an active business but declared bankruptcy in November 2021. 8. TR is planning to sell a new product in 2022 -a bracelet with a charm depicting a popular cartoon character. The bracelet and charm will be ordered from separate suppliers, and TR's staff will assemble the two pieces and package them in a specially designed box. 9. Shortly after incorporation, TR acquired 46% of the voting common shares of Q Ltd., a Canadian-controlled private corporation that supplies certain products to TR and other retailers. On October 31, 2021, TR received a non-eligible dividend of $15,000 from Q Ltd. At the time, Q Ltd. had non-eligible RDTOH of $2,000. An opportunity exists for TR to purchase an additional 5% of the voting common shares of Q Ltd. early in 2022. A decision will be made in January 2022. 10. On November 30, 2021, TR declared and paid a non-eligible dividend of $40,000. Required: 1. Under Part I of the Income Tax Act, determine the minimum income for tax purposes and taxable income for TR Ltd. for the 2021 taxation year. 2. Based on your answer to 1, calculate TR's minimum Part I and Part IV federal income tax for the 2021 taxation year. 3. Briefly describe the tax consequences, if any, if TR Ltd. purchases the additional 5% of the shares of Q Ltd. in January 2022. 4. Advise TR Ltd. on the tax implications, if any, of selling its new charm bracelet in the 2022 TR Ltd. is a Canadian-controlled private corporation operating a franchised retail and mail-order business in Vancouver. Denver Chan, the company's president, owns 100% of the corporation's share capital. The corporation was created on December 1, 2020. For the year ended November 30, 2021, TR Ltd.'s financial statement reported income before income taxes of $157,090. Yo rel: fini TF 1. Ap after March 18, 2007. On October, 15, 2021, the truck was involved in an accident. The damage was not repairable, and TR immediately signed an agreement with the insurance company to settle the claim for $31,000. The cash was received on December 10, 2021. Another truck was obtained under a lease arrangement. Amortization expense of $28,000 has been deducted from income. 2. Legal expense includes the following costs: Preparing annual corporate minutes Incorporation costs for TR Ltd. Negotiation of franchise agreement 3. Repairs and maintenance expense includes the following items: Paving the parking lot Cleaning and supplies Replacing a broken window 5. A contingent reserve for possible defective products of $5,000 is recorded as a charge against cost of sales. During the year, $3,000 of products were returned. 6. On May 31, 2021, TR invested $40,000 in a one-year bank certificate earning annual interest of 7%. TR intends to recognize the interest revenue upon receipt at its one-year anniversary date. 7. Interest expense includes $14,000 on the building mortgage and $700 from a temporary bank loan of $12,000. The bank loan funds were, in turn, loaned, without interest, to Y Ltd., a corporation owned by Denver's brother. Y Ltd. used all of its assets to operate an active business but declared bankruptcy in November 2021. 8. TR is planning to sell a new product in 2022 -a bracelet with a charm depicting a popular cartoon character. The bracelet and charm will be ordered from separate suppliers, and TR's staff will assemble the two pieces and package them in a specially designed box. 9. Shortly after incorporation, TR acquired 46% of the voting common shares of Q Ltd., a Canadian-controlled private corporation that supplies certain products to TR and other retailers. On October 31, 2021, TR received a non-eligible dividend of $15,000 from Q Ltd. At the time, Q Ltd. had non-eligible RDTOH of $2,000. An opportunity exists for TR to purchase an additional 5% of the voting common shares of Q Ltd. early in 2022. A decision will be made in January 2022. 10. On November 30, 2021, TR declared and paid a non-eligible dividend of $40,000. Required: 1. Under Part I of the Income Tax Act, determine the minimum income for tax purposes and taxable income for TR Ltd. for the 2021 taxation year. 2. Based on your answer to 1, calculate TR's minimum Part I and Part IV federal income tax for the 2021 taxation year. 3. Briefly describe the tax consequences, if any, if TR Ltd. purchases the additional 5% of the shares of Q Ltd. in January 2022. 4. Advise TR Ltd. on the tax implications, if any, of selling its new charm bracelet in the 2022