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[answered] Lisa Simpson, a self-employed consultant, has asked for you


income tax question attached need to calculate division? income

need to calculate division? income


Lisa Simpson, a self-employed consultant, has asked for your assistance in preparing her tax return for the

 

year ended December 31, 2016. She has provided you with the following revenue, expenses and other

 

information related to the activities of the business:

 

Gross consulting fees received $ 155,000

 

Assistant?s salary (part-time) 25,500

 

Liability insurance expense 5,000

 

Office expenses 1,200

 

Office equipment 1,000

 

Automobile expenses (1) 1,000

 

Interest expense (loan for business use) 10,500

 

Professional courses (to maintain skills) 1,400

 

Beginning undepreciated capital cost:

 

Office equipment (Class 8) 10,500

 

Automobile (Class 10.1) (1) 20,000

 

(1) During the year, Jessica drove her automobile 30,000 kilometres, of which 15,000 kilometres were for business

 

purposes. Lisa owns two residential rental properties. The details of each property are as follows:

 

Property A Property B

 

Original cost $ 300,000 $ 400,000

 

UCC on January 1 95,000 120,000

 

Rental revenue 15,000 20,000

 

Mortgage interest 8,000 15,000

 

Property taxes 3,000 4,000

 

Operating expenses 1,000 6,000 During year, Lisa sold property B for $500,000, incurring real estate commissions of $11,000. The

 

allocation between land and building is 65% and 35%, respectively.

 

During the year, Lisa sold shares of Canadian Cable Systems Inc. (a Canadian public company) for

 

$40,000. Her adjusted cost base was $32,000. Prior to selling the shares, she received dividends of $600.

 

She also sold a coin collection for $1,500, which had a cost of $800, and an antique set of golf clubs that

 

cost $500 for proceeds of $300.

 

In January, Lisa sold both her existing home and a vacation cottage to purchase a single larger residence

 

in the city. Details of the sold properties are as follows:

 

House Cottage

 

Year of purchase 2005 2010

 

Cost $ 400,000 $ 250,000

 

Selling price 500,000 375,000

 

Real estate commissions 19,500 15,300 Required:

 

Calculate Lisa?s minimum Division B income (net income for tax purposes) for the year ended December

 

31, 2016. Clearly identify income from business, property (rental separate), and taxable capital gains.

 

Show all calculations whether or not necessary to the final answer.

 


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