AFM363 Lecture Notes - Lecture 11: Tax Rate, Income Tax, Old Age Security

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OC2146671

8 Jun 2020

School

University of Waterloo

Department

Accounting & Financial Management

Course

AFM363

Professor

Dan Rogozynski

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Document Summary

Stock option deductions: 50% of employment benefit, non-ccpc. Fmv<=exercise price at grant date: deducted in year of exercise, ccpc. Inclusion rate applied: carry back three years, forward indefinitely, against net taxable gains realized in the year only, non-capital losses, carry back 3 years, carry forward 20 years, applied against any type of income, capital gains deduction. Total income tax on taxable income (use brackets) Personal tax credits: basic personal, age (65+, pension, canada employment. Charitable gifts credit: non-refundable (5 year carryforward) First at the lowest marginal rates: excess in the largest marginal tax rate to the extent of taxable income above ,372 plus, second highest tax rate for remaining gifts, maximum is 75% of division b net income. Lowest marginal rate x eligible tuition fees: carryforward indefinitely, transfers to spouse, parent or grandparent, maximum transfer is ,000 per year.

Related Questions

Maxitech is a Canadian company. It has always used a December 31 year end. On January 1, 2016, the company had the following carry forward balances:

- Net Capital Losses 75,600

- Non-Capital Losses 51,400

- Unused Charitable Donations 4,600

During the 2016 taxation year, Maxitech's records show the following results (all amounts are based on the relevant tax rules):

- Net Business Loss 142,000

- Taxable Capital Gains 21,400

- Allowable Capital Losses 6,500

- Charitable Donations 3,200

- Dividends from Taxable Canadian Corporations 30,400

Required: Calculate the Corporation's minimum net income for tax purposes and taxable income for it's 2016 taxation year. Indicate any balances available for carry forward to subsequent years under each of the following assumptions:

A. It is the policy of the company to minimize net capital loss balances prior to using any other type of carry over balance.

B. It is the policy of the company to minimize non-capital losses prior to using any other type of carry over balance.

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4. _____ In Commissioner v. Tufts, 461 U.S. 300, 103 S.Ct 1826,the Supreme Court concluded that when the amount of thenon-recourse note assumed by the buyer exceeds the propertyâs fairmarket value, the seller excludes the excess from the amountrealized on the sale. 5. _____ Prior to their marriage Jack soldDiane 50% interest in his rental property. Jack is not required torecognize gain/loss on the sale since the sale was in contemplationof marriage. 6. _____ Under a divorce decree the ex-spouse mustrelinquish ownership in an asset to the husband three years afterthe divorce is final. The husband will assume the basis of theproperty from the ex-spouse. 7. _____ A loss on the sale of apersonal residence is not deductible. 8. _____ When the buyerassumes the sellerâs liability on a mortgage, the seller includesthe amount of the mortgage in computing the amount realized fromthe sale. 9. ____ Trade Accounts Receivable are capital assets. 10._____ A corporation may carry forward capital losses to offsetagainst capital gains indefinitely 11. _____To qualify as Section1231 property, it must be used in the trade or business and must beheld for more than one year. 12. _____ Under IRC Section 165(g) ifany security which is a capital asset becomes worthless during thetaxable year, the loss shall be treated as a loss from the sale orexchange of a capital asset on the last day of the taxable year.13. _T____ Business property held for less than or equal to oneyear always produces ordinary income or loss. 14. _____ The basisof business property is reduced by the greater of the depreciationallowed or allowable. 15. ____ Janice buys property by paying$1,000 down and borrowing $9,000. Janiceâs initial basis in theproperty is $1,000.

AFM363 Lecture Notes - Lecture 11: Tax Rate, Income Tax, Old Age Security

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