Starfax Ltd. is a Canadian controlled private corporation that is not associated with any other corporation and is not involved in manufacturing or processing activities. In the current year, Starfax Ltd. has net income for tax purposes of $635,000. This income is comprised of the following amounts: Active business income $590,000 Dividend income from taxable Canadian corporations $ 30,000 • Canadian source interest income $ 15,000 Which of the following is the correct General Rate Reduction for Starfax Ltd. in the current year? O A. $11,700 O B. $1,950 O C. $78,650 O D. $82,550

Starfax Ltd. is a Canadian controlled private corporation that is not associated with any other corporation and is not involved in manufacturing or processing activities. In the current year, Starfax Ltd. has net income for tax purposes of $635,000. This income is comprised of the following amounts: Active business income $590,000 Dividend income from taxable Canadian corporations $ 30,000 • Canadian source interest income $ 15,000 Which of the following is the correct General Rate Reduction for Starfax Ltd. in the current year? O A. $11,700 O B. $1,950 O C. $78,650 O D. $82,550

SWFT Corp Partner Estates Trusts

42nd Edition

ISBN:9780357161548

Author:Raabe

Publisher:Raabe

Chapter9: Taxation Of International Transactions

Section: Chapter Questions

Problem 52P

See similar textbooks

Similar questions

Danbury Inc is a resident Canadian corporation with worldwide operations. Canadian operations resulted in taxable income of $1.10 million and non-Canadian operations resulted in taxable income of $496,000. Prior to any credits or deductions (including Federal Tax Abatement and General Rate Reduction), how much are federal income taxes payable on Danbury Inc's non- Canadian operations? A. $74,400 B. $252,960 C. $188,480 OD. $138,880 24
ABC Ltd., a Canadian-Controlled Private Corporation located in Edmonton, Alberta provides products and services to the oil field industryThe following selected information has been taken from the tax records of ABC Ltd. for its fiscal year ended December 31, 2020: Net Income for tax purposes $705,078The income includes $48,000 portfolio dividends received from taxable Canadian corporations and Taxable capital gains $10,000. Also, includes a charitable donation of $5,500, interest revenue 105,000You noted their Taxable Income is $630,328 and it's calculated correctly.On December 31, 2020, non-eligible The refundable Dividend Tax On Hand (RDTOH) account balance was $100,000.In 2020, a total of $97,000 in taxable non-eligible dividends was paid to the shareholders of ABC ltd.ABC ltd. is associated with another 3 the corporation, therefore, agrees to share the annual SBD business limit (25% each). Required:Calculate the minimum Part I tax payable, Part IV tax…
Fracto Inc. is a Canadian controlled private corporation with a December 31 year end. For the taxation year ending December 31, 2019, its Net Income For Tax Purposes was made up of the following components: Active Business Income (Note 1) $ 514,400 Dividends From Canadian Corporations: Wholly-Owned Subsidiary (Note 2) 297,400 Portfolio Investments (All Eligible Dividends) 89,600 Canadian Source Interest 44,300 Taxable Capital Gains 93,100 Net Income For Tax Purposes $1,038,800 Note 1 As determined under ITR 5200, $326,000 of this total qualified as M&P profits. As these amounts are allocated to a province which has a special rate for M&P profits, the company calculates the federal M&P deduction.…
For the current year, 2022, net income for tax purposes is $264,600. Included in this amount is the following: Income from an active business carried on in Canada Taxable capital gain Eligible dividends from Canadian public companies Canadian bond interest The following is a summary of other information for Wrap Ltd. for the 2022 year: Taxable income Capital dividend paid Eligible dividend paid Non-eligible dividend paid Small business deduction Total Federal Part I tax payable $200,200 6,200 18,000 40,200 $236,200 12,200 10,200 75,200 38,038 32,120 Required: Determine the dividend refund for 2022. Would the dividend refund change if Wrap Ltd. was not a CCPC but instead was a private corporation or a public corporation? (Use 0.3067 when multiplying to represent 30% %. and 0.3833 when multiplying to represent 38 1/3%. Do not multiply by more than 4 decimal places and round your final answer to the nearest dollar. Enter subtractions as negative amounts.)
Sky Company is a CCPC with the following amounts in the current year: • Interest income from Canadian sources of $23,000 • Dividend income received from taxable Canadian corporations of $13,000 • Net rental loss of $1,450 • Foreign dividend income received from US public companies of $17,500 (CAN$) • Net taxable capital gains of $11,250 During the current year, Sky Company utilized a net capital loss carryover from the previous year of $8,000. The correct amount of aggregate investment income for Sky Company in the current year is: Choose the correct answer. OA. $42,300 B. $43,750 C. $63,300 O D. $55,300
Sweat Inc. is a CCPC throughout the year and is not associated with any other corporation. For the year ending December 31, 2021, Sweat has Net Income for Tax Purposes of $422,000. This amount is made up of dividends from taxable Canadian corporations of $22,000, active business income of $380,000, and foreign non-business income of $20,000. The foreign income was subject to withholding in the foreign jurisdiction at a rate of 13 percent. Sweat receives a foreign tax credit against federal Tax Payable that is equal to the amount withheld. Sweat has a non-capital loss carry forward of $145,000 which it intends to deduct during 2021. The AAII for Sweat Inc. in the prior year was $35,000 and the TCEC for Sweat Inc. in the prior year was $375,000. Determine Sweat s small business deduction for the year ending December 31, 2021.
Case #2 Banff Ltd. is a CCPC through the 2021 taxation year. It has a December 31 year end and is not associated with any other companies. Its $422,000 Net Income For Tax Purposes is made up of the following components: Active Business Income $375,000 Dividends From Taxable Canadian Corporations 15,000 Foreign Non-Business Income (100%) 32,000 The foreign jurisdiction withheld $3,200 from the foreign non-business income. The Company receives a credit against federal Tax Payable for this amount. The Company has a non-capital loss carry over of $96,000 that it intends to deduct during 2021. The AAII for Banff Ltd. in the prior year was $42,000 and the TCEC for Banff Ltd. in the prior year was $475,000. Determine Banff's small business deduction for the year ending December 31, 2021.
Axtell Corporation has the following taxable income: U.S. source income Foreign source income: Country A Country B Country C Taxable income $ 1,620,000 550,000 2,000,000 2,900,000 $ 7,070,000 Axtell paid $600,000 income tax to Country B and $1.3 million income tax to Country C. Country A does not have a corporate income tax. Required: Compute Axtell's U.S. income tax, assuming the foreign source income does not qualify as FDII. Note: Do not round any intermediate calculations. Enter your answer in dollars and not in millions of dollars. U.S. income tax
Rainbow Co. is a Canadian controlled private corporation with active business income of $350,000 in 2020. The company engages in retail and wholesale activities. Capital gains recognized by the company in 2020 totaled $84,000. Rainbow Co. will utilize a net capital loss carry-over of $28,000 on its 2020 tax return. Required: Calculate the following for Rainbow Co. for 2020: A. Net Income for Tax Purposes B. Taxable Income C. Part I Federal Tax - Identify amounts for 1) basic federal tax, 2) federal abatement, 3) refundable tax on investment income, 4) small business deduction, 5) general rate reduction), and 6) the total federal tax.
Krebs, Inc., a U.S. corporation, operates an unincorporated branch manufacturing operation in the U.K. In the most recent year, Krebs, Inc., reported $1,00,000 of taxable income from the U.K. branch on its U.S. tax return, along with $1,600,000 of taxable income from its U.S. operations. Krebs paid $150,000 in U.K. income taxes related to the $1,000,000 in branch income. Assuming a U.S. tax rate of 21%, what is Krebs’ U.S. tax liability. Group of answer choices $0 $150,000 $396,000 $546,000
Epic Inc. is a CCPC with a December 31 taxation year end. The following information relates to the 2021 taxation year. 1. The Company had Canadian source active business income of $237,000. Of this total, it was determined that $126,000 qualified as M&P profits under ITR 5200. 2. The Company received $25,500 in foreign investment income. This was net of $4,500 foreign income tax withheld. 3. Net income for 2021 is $277,000. This is made up of the $237,000 in active business income, the $30,000 in foreign investment income, and $10,000 in taxable capital gains. 4. Because of a $50,000 2019 non-capital loss balance that was claimed taxable income is $227,000. 5. The Company shares the annual business limit for the small business deduction with two other companies. Epic's allocated share of the business limit is $200,000. 6. Assume that the foreign tax credit for foreign investment income is equal to the amount withheld. 7. For the 2020 taxation year, the combined…
11. Elm Inc. is a Canadian controlled private corporation. During the current taxation year ending December 31, the Company has the following amounts of property income: Interest On Long Term Investments $36,000 Taxable Capital Gains 99,000 Dividends From Portfolio Investments 85,000 Net Rental Income 27,000 The Company’s current year Net Income For Tax Purposes is $460,000. In calculating Taxable Income, the Company deducted a $50,000 net capital loss carry forward. In calculating Tax Payable, the Company deducted a small business deduction of $25,000. The Tax Payable has been correctly determined to be $75,000. The refundable amount of Part I tax for the current year ending December 31 is: a) $34,347 b) $59,316 c) $0 d) $75,000 12. Barnum Ltd. is a CCPC with a December 31 year end. For the current taxation year, the Company has a Net Income For Tax Purposes of $451,000. This is made up of active business income of $250,000, dividends from taxable Canadian corporations of $65,000,…