Exam 11: Corporations-An Introduction

The Canadian tax system practices integration between corporations and individuals. Using the data in Table 1 and assumed rates, illustrate and explain the concept of integration. Table 1

Which of the following scenarios is not allowed?

When shares are transferred from one group of shareholders to another and there is a change in control, which of the following applies?

Which of the following statements accurately describes the tax treatment of Canadian corporations?

Using general terms, explain how a change in control of a corporation can affect the net-capital losses and the non-capital losses.

Coffee Co. began operations in 20x0 and recognized $37,000 in business income and $1,000 in taxable capital gains that year. In 20x1, the company incurred a business loss of $25,000, a taxable capital gain of $2,000, and an allowable capital loss of $5,000. Business income for 20x2 was $50,000, taxable capital gains were $4,000, and the company received $10,000 in dividends from a taxable Canadian corporation. Coffee Co. utilizes any unused losses in the earliest years possible, Which of the following taxable incomes are correct after all carry-over adjustments have been made?

Johnson Co. is a CCPC with active business income of $350,000 in 20xx. The company engages in retail and wholesale activities. Capital gains recognized by the company in 20xx totaled $84,000. Johnson Co. will utilize a net capital loss carry-over of $28,000 on its 20xx tax return. Required: Applying tax rates and amounts for 2019, calculate the following for Johnson Co. for 20xx: a) Net Income for Tax Purposes b) Taxable Income c) Federal Tax

Bride and Groom Co. is a Canadian controlled private corporation with active business income of $750,000 in 20x9. Dividends were received during 20x9 from a taxable Canadian corporation in the amount of $80,000. The company recognized a $50,000 capital gain during 20x9. The company's year-end is December 31^st. Additional information is as follows: Net capital loss carry-over from 20x8 is $30,000. Non capital loss carry-over from 20x8 is $70,000. Required: Calculate the following for the company for the 20x9 tax year: A) Net income for tax purposes B) Taxable income C) Part I Federal tax (Use tax rates and amounts applicable for 2019 for each of the above.)

Steven Co. is a public Canadian corporation which was established five years ago. The company's head office is located in Saskatchewan. In 2018, a small branch was established in Manitoba. In 2019, the company's books included the following: Required: A) Calculate the company's net income for tax purposes for 2019. B) Calculate the company's taxable income, both federal and provincial. (Round all amounts to two decimal places.) C) Calculate Steven Co.'s Part I federal tax liability. (Round all numbers to zero decimal points.) (Use tax rates and amounts applicable for 2019 for each of the above.)