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(Solved): Mr. Davis, age 45, who resides in Vancouver, has provided you with the following information concern ...



Mr. Davis, age 45, who resides in Vancouver, has provided you with the following information concerning his 2021 tax return: Employment income for tax purposes: $150,000 Proprietorship (business): Income Statement for the year ended December 31, 2021 Revenues $250,000 Expenses: Cost of goods sold $80,000 General and administrative 20,000 Depreciation 35,000 Other expenses 5,000 Total expenses (140,000) Net income before tax $110,000 Tax expense (18,000) Net income after tax $92,000 Additional information: — General and administrative expenses include Golf membership fees of $3,000 —Other expenses include interest and penalties on income tax assessment of $2,000 —CCA for the year was $40,000 —He sold an equipment he used in his business (only asset in class). There was no accounting gain or loss realised. Details of this sale for tax purposes: Equipment Original cost $100,000 UCC, January 1, 2021 95,000 Proceeds of disposition 90,000 Property income (loss) for tax purposes: Rental loss (not due to CCA) -15,000 Canadian interest income 10,000 Taxable dividends, in cash, received from: — taxable Canadian public corporations (eligible) 8,000 Interest on bank loan to purchase Canadian securities which yield the above dividends -1,000 Taxable capital gains (allowable capital losses): Shares of X Ltd., a Canadian public company -20,000 Shares of Y Ltd., a Canadian public company 5,000 Listed personal property 3,000 Personal-use property -1,000 Other: —Mr. Davis received child support in the amount of $12,000 and spousal support of $7,000. —He contributed to TFSA in the amount of $17,000 —He paid child care costs o f $9,000 for his 6 year old child (Earned income for child care costs is $175,000). Required: Compute Mr. Davis’s Net Income for Tax Purposes (Division B income), according to the rules in Section 3. All items must be correctly located in the correct paragraph to obtain marks. (Hint: Calculate Net Business Income with Recapture/Terminal loss, Net Property Income, Net Taxable Capital Gains, Child Care Costs first. Then put everything together under Section 3). IMPORTANT - Please show all calculations to gain full marks.



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