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2 Feb 2019

a PSC has made a section 444 election to obtain November 30 yearend. Which of the following rules only apply to a PSC in thissituation?

a) there must be a business purpose for this year end.

b) there are minimum distribution requirements.

c) the required payment must be made

d) it can carry back an NOL.

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Keith Leannon
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4 Feb 2019

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On February 10, 2018, Ace Corporation, a new calendar yearcorporation, elected S corporation status and all shareholdersconsented to the election. There was no change in its shareholdersduring the current year. Ace met all eligibility requirements foran S corporation during the preelection portion of the year. Whatis the earliest date on which Ace can be recognized as an Scorporation?

February 10, 2018

January 1, 2019

February 10, 2019

January 1, 2018

In March of 2017 Frederick acquired an passenger automobile for$45,000 and used the automobile 85% for business. Themaximum depreciation deduction for 2017 is:

$3,160

$11,160

$8,928

$9,486

In August of 2017, Joseph acquires andplaces into services business equipment costing $300,000. Theequipment is classified as 5-year recovery property. No otheracquisitions are made during the year. Joseph elects to expense themaximum amount under Sec. 179. Joseph’s total deductions for theyear are:

$60,000

$500,000

$100,000

$300,000

For the current tax year, VBN, an S Corporation distributes$100,000 to its sole shareholder, Raymond. His basis in the stockwas $140,000 before the distribution. VBN had once been a regular CCorporation and had remaining accumulated earnings and profits(E&P) from those years of $70,000. However, VBN has no balancein its accumulated adjustment account. How should the distributionof $100,000 be handled?

$100,000 as a taxable distribution

$70,000 as a taxable dividend, and $30,000 has a non taxablereturn of capital

$50,000 as a taxable dividend, and $100,000 as a non taxablereturn of capital

$70,000 as a taxable dividend; and $30,000 as a capital gain

Stahl, an individual who owns 100% of Talon, an S corporation,had a basis of $50,000 at the first of the year. During the yearTalon reported the following: Ordinary Loss of $10,000; Municipalinterest income of $8,000, Long term capital gain of $4,000; andLong term capital loss of $9,000. What was Stahl's basis in Talonat year end?

$56,000

$65,000

$53,000

$43,000

The County of Maxnell decides to create a sanitation department and offer its services to the public for a fee. As a result, county officials plan to account for this activity within the enterprise funds. Prepare journal entries for this operation for the following 2017 transactions as well as necessary adjusting entries at the end of the year. Assume the information is being gathered to prepare fund financial statements. Only entries for the sanitation department are required here:

January 1 Received unrestricted funds of $227,000 from the general fund as permanent financing.
Febrauary 1 Borrowed an additional $180,000 from a local bank at a 12 percent annual interest rate.
March 1 Ordered a truck at an expected cost of $115,000.
April 1 Received the truck and made full payment. The actual cost amounted to $117,000. The truck has a 10-year life and no salvage value. Straight-line depreciation is to be used.
May 1 Received a $27,700 cash grant from the state to help supplement the pay of the sanitation workers. The money must be used for that purpose.
June 1 Rented a garage for the truck at a cost of $2,200 per month and paid 12 months of rent in advance.
July 1 Charged citizens $19,000 for services. Of this amount, $15,400 has been collected.
August 1 Made a $13,000 cash payment on the 12 percent note of February 1. This payment covers both interest and principal.
September 1 Paid salaries of $25,500 using the grant received on May 1.
October 1 Paid truck maintenance costs of $2,000.
November 1 Paid additional salaries of $19,500, first using the rest of the grant money received May 1.
December 31 Sent invoices totaling $20,400 to customers for services over the past six months. Collected $5,200 cash immediately.
December 31 A new landfill was opened this year. It is 12 percent filled as of the end of the year. The estimated current cost for the eventual closure of this facility is $2.1 million although no payments will be made for approximately 9 years.

a) Record the accrual of interest expense - Enterprise fund.

b) Record the expense for landfill closure and liability.

You work for an organization in Nova Scotia and your manager,Jessica Boyer, has asked you to prepare a memo detailing theremittance responsibilities and legal consequences ofnon-compliance with statutory remittance requirements.

studing material :

Employers are responsible for registering and maintaining apayroll program account with the Canada Revenue Agency. Theemployer will remit the statutory deductions withheld from theemployees’ remuneration for Canada Pension Plan (CPP)contributions, Employment Insurance (EI) premiums, and federal andnon-Québec provincial income taxes, along with the employerportions of CPP and EI to this account.
In Trust

Statutory deductions are deemed to be held in trust for theReceiver General for Canada. This means the amounts withheld fromemployees, along with the employer’s portion, must be kept separatefrom the operating funds of the business and cannot be part of anestate in liquidation, assignment, receivership, or bankruptcy.Employers who make their own government remittances, as opposed tohaving them remitted by a service provider, must separate all CPPcontributions, EI premiums and income tax withholdings, along withany employer portion, from the organization’s regular bank account.All statutory deductions and contributions must be held in aseparate payroll account until the remittance is made to theReceiver General.

Remitter Type

An organization’s remittance frequency depends on its averagemonthly withholding amount for the second preceding calendar year.For example, the withholding amount for 2017 will depend on theemployer’s average monthly withholding amount made in 2015.Employers may apply to the Canada Revenue Agency to have theiraverage monthly withholding amount for the current or previous yearused instead of the second preceding year. This would beadvantageous if the employer’s payroll for the previous year waslower than the payroll for the second preceding year.

Remittance Schedule

Once an employer has been advised by the CRA what type ofremitter they are, a schedule, based on that type, is used todetermine when the remittances are due to the CRA. The payment forthe first three types of remitters – quarterly, regular, andaccelerated threshold 1 – is due by a specified date based on thepayroll cheque/deposit date. The remittance for acceleratedthreshold 2 remitters is due three business days after the end ofthe weekly period, established by the CRA, in which the payrollcheque/deposit date falls. In all cases, the payroll cheque/depositdate is the date when the money is paid to the employee or directlydeposited in their bank account. The period end date, the payrollprocessing date and the date the pay statement is handed to theemployee are all irrelevant in determining the remittance date.

Penalties and Interest Charges

The CRA may assess a penalty of up to 10% of the required amountof CPP contributions, EI premiums and income taxes due for lateremittances (20% on the second and later occurrences). An employerwho withholds the statutory deductions but does not remit them, orfails to deduct the required deductions will be subject to a 10%penalty for the first occurrence on the amount that should havebeen deducted and remitted (20% on the second and lateroccurrences). The penalties for late remittances are asfollows:
 3% if payment is late 3 business days or less
 5% if payment is late 4 or 5 business days
 7% if payment is late 6 or 7 business days
 10% if payment is 8 or more business days late Normally thepenalty is only applied to the part of the amount that the employerfails to remit that is more than $500.00, however the CRA may applythe penalty to the total amount if the failure to remit, or thelate remittance, was made knowingly or under circumstances of grossnegligence. Again, special attention is required at the end of theyear if producing any manual cheques after the final pay period forthe year has been processed

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