Walnut Ltd. is a Canadian-controlled private corporation whose fiscal period coincides with the calendar year. For the year 2021, the companys taxable income was calculated as follows:

1) Taxable capital gains was a result of using excess funds to speculate in the stock market

2) Walnut had no shares own in any of the companies that paid patent income Walnut had net capital losses carried over from 1999 of $36,000 and non-capital losses carried over from 2019 of $17,500. The company believed in supporting the community and provided donations to the united way $51,000 for 2021.

At December 31, 2020, there was a balance of $30,000 and $5,000 for the non-eligible and eligible refundable dividend tax on hand account respectively. The company subsequently thereafter received a dividend refunds of $11,000 and $1,500 on the non-eligible and eligible dividends respectively paid out on their 2020 T2 return. The company paid $125,000 in non-eligible dividends and $40,000 in eligible dividends during 2021 to individual shareholders.

WALNUT had Taxable capital employed in Canada in 2021 $10,500,000. The company has a permanent establishment in New Brunswick and in the United States. Its gross revenue, net of dividends and net of rentals, and its salaries and wages are attributed to its permanent establishments as follows:

In the United States a salesman worked out of his home in which he kept a small stock of merchandise from which he filled orders.

(a) Compute the federal Part I tax and assumed provincial tax at a 12% rate on federal taxable income payable by the company for 2021. Show in detail the calculation of all deductions in the computation, using a separate schedule for each special deduction. In calculating the small business deduction list all ineligible items of income, if any, and indicate the amount of the business limit available for the subsidiary.

(B) Compute the refundable dividend tax on hand balance as at December 31, 2021, showing, in detail, your calculations and compute the dividend refund for 2021

$325,900 Income from distributing net of CCA. Wholesale income.. $112,000 Consulting Income...... $58,000 Dividends from taxable corporations: Eliigible Dividend from a corporation where Walnut Ltd owns 75% of the shares of the company resulting in a refund for the company of $3,256................. 18,000 Non-eligble from a corporation where Walnut Ltd owns 9% of the shares. . 16,000 Taxable capital gain .... .Note 1.... ..$47,000 Allowable capital losses .. .(25,000) Royalties .... ...26,000 Recapture of CCA on disposal of sales equipment... ...6,000 Income from rental of Warehouse to an associated company which Earns only active business income.............. ...... 27,000 Interest on Term deposits from Germany net amount after withhold taxes Deducted of $3,300).Canadian S............. .....9,475 Interest on Investments in Bonds from Norway gross amount subject to Withholding taxes of $2,125.....Canadian $................ .7,300 Net Foreign business income (foreign tax withheld of $4,000) .... .9,000 Patent Income......................Note 2............ .20,000 Interest charged on accounts receivable.. . 8,000 Net income for tax purposes.. $664,675 New Brunswick ..... United States. Totals .... Gross Revenue $ 989,000 231,000 $ 1.220,000 Salaries & wages $313,000 75,000 $344.000 $325,900 Income from distributing net of CCA. Wholesale income.. $112,000 Consulting Income...... $58,000 Dividends from taxable corporations: Eliigible Dividend from a corporation where Walnut Ltd owns 75% of the shares of the company resulting in a refund for the company of $3,256................. 18,000 Non-eligble from a corporation where Walnut Ltd owns 9% of the shares. . 16,000 Taxable capital gain .... .Note 1.... ..$47,000 Allowable capital losses .. .(25,000) Royalties .... ...26,000 Recapture of CCA on disposal of sales equipment... ...6,000 Income from rental of Warehouse to an associated company which Earns only active business income.............. ...... 27,000 Interest on Term deposits from Germany net amount after withhold taxes Deducted of $3,300).Canadian S............. .....9,475 Interest on Investments in Bonds from Norway gross amount subject to Withholding taxes of $2,125.....Canadian $................ .7,300 Net Foreign business income (foreign tax withheld of $4,000) .... .9,000 Patent Income......................Note 2............ .20,000 Interest charged on accounts receivable.. . 8,000 Net income for tax purposes.. $664,675 New Brunswick ..... United States. Totals .... Gross Revenue $ 989,000 231,000 $ 1.220,000 Salaries & wages $313,000 75,000 $344.000