Reference no: EM132344274
You must fill in the above chart above and attach it to your assignment.
1. Make sure you read carefully, play the "role" and do the "requireds" and follow the format instructions below or marks will be deducted.
2. Format Instructions: Your assignment solution must be typed and not handwritten and must be a professional report or memo. You must not exceed 7 pages of writing (word document) plus 5 pages of exhibits (excel spread-sheets) plus a word document cover sheet with a table listing group members. If you delegate responsibilities to group members, other group members should review and edit to ensure that the assignment requirements are met and that there are no technical or formatting errors because marks will be deducted.
- 7 pages max Word document: You must use minimum 12 pt font Arial (or equivalent sized font) and double space. You must use sentences, proper grammar and spelling. Point form may be used, where appropriate. Page layout must be portrait. Margins can be any width. You must have page #'s.
- 5 pages max Excel spreadsheets: Each sheet in the file must fit on one page and must be readable (similar to excel exhibits we have posted for you on Moodle) There is no 12pt, double space requirement. Page layout may be portrait or landscape. Exhibits must have titles and conclusions.
It is now July 15, 2019. You are a CPA student working for Mrs. Partner, a partner in the tax department of a CPA firm in Toronto, Ontario. Mrs. Partner and your team have been working together on a number of clients with various tax issues.
Mrs. Partner has summarized her notes with the clients below.
Mrs. Partner would like you to prepare a memorandum to her attention that addresses the relevant tax issues for these clients. Mrs. Partner has reminded you to indicate any additional information that you will require to complete your analysis. She has also asked that you organize your memorandum under the same headings that she used in the attached notes so that she can easily cross-reference them.
4. David Skin
David Skin (age 61) is a dermatologist and a new client of the firm. He told me that, when he became a doctor, he figured that, with a name like his, he should specialize in dermatology! He is married to Susan (age 57). They have 4 children who live with them
- Megan (age 24), Mark (age 21), Matthew (age 19) and Maureen (age 15). All the family members have their birthdays in January.
David operates his dermatology practice in a professional corporation, David Skin MD Professional Corporation (PC). He also has a management corporation, Great Skin Services Inc. (MC). Both corporations Have a December 31styear end for tax purposes.
a) PC
David owns 100 voting shares of PC and Susan owns 100 non-voting common shares of PC. PC has no other shares issued. PC earned 2018 active business income and taxable income of $500,000, after all expenses. Included in the expenses is a $300,000 salary to David. PC has filed its 2018 corporate income tax return, claiming a small business deduction of $500,000. And has paid all corporate taxes owing and is up to date with instalments.
David, of course, works in the practice full time but Susan does not and never has worked for PC. PC used to pay dividends to Susan, but they forgot to pay Susan any in 2018. David would like to know how a dividend to Susan would be taxed if she were to be paid one in 2019. We reviewed the 2018 tax return for PC and it has no general rate income pool at the end of 2018. You can assume there will be none in 2019. I would also like to know if there are other considerations for dividends to Susan in future years.
PC has never registered for GST/HST. David was talking to some other dermatologists who indicated their practices are all registered. David need to know if he needs to register. I asked him if any of his services are purely cosmetic in nature. He said yes, but he wasn't sure how much of his 2018 revenue was from such services.
I need good explanations with a detailed analysis for all of this because I will need to explain it to David and I have other clients in similar situations.
b) MC
MC has 100 common shares issued. Each of the three adult children owns 30 shares. Maureen owns 10 shares. No other shares are issued. MC pays for all the expenses of the dermatology practice (rent, salaries for staff, supplies, etc.) and charges PC a management fee of the expenses plus 15%.
MC has filed its 2018 tax return and reported taxable income and active business income of $150,000. The return shows small business deduction on $150,000, but I am not sure this is correct. If it isn't we will have to amend the tax return. Please provide me with a detailed analysis in respect of this.
David is also wondering how dividends to the children from MC would be taxed. He would like the children to receive dividends. The three older children are in university and dividends would help with funding. Maureen is an avid equestrienne and a dividend could be used to pay for her horse and expenses. I need a detailed analysis of this so I can explain it to David.
Attachment:- Costs of Building Project.rar