RSM424H1 Study Guide - Final Guide: Capital Gain, Tax Bracket
Document Summary
Calculate george"s net income for tax purposes for the 20x1 taxation year. Each partner"s income is determined by the share of the partnership"s income not how much they take out of the partnership. Step 1) calculate the ni for tax purposes for the partnership. Step 2) determine george"s share of income by source. Note: given that the partnership"s net income for tax purposes is ,000, business income will be the plug. The non-eligible dividend will need to be grossed up by 15% when received by an individual. Dividend gross-up is not included since it would increase acb. Donation was added back to partnership income which artificially increased acb. Transfer partnership interest with section 85 to a corporation. George will hold shares of the corporation. Corporation is the partner in the restaurant instead. To determine if it is worthwhile to incorporate, compare the tax rates of george and a corporation.
