Reference no: EM133043083
Question - D.M. Paper Company is a Canadian-controlled private corporation (CCPC). The Company handles retail distribution or paper supplies. The following Income Statement has been prepared to assist you in completing D.M. Paper Company's tax return for the year ending December 31, 2020:
Revenues from Operations $5,300,000
Expenses from Operations (4,940,000)
Income from Operations $360,000
Other Income 181,500
Income before Taxes $541,500
Income Tax Provision (41,500)
Net Income $500,000
All of the revenues of D.M. Paper The company are earned in a province in Canada and are taxable during 2020.
The Expenses from Operations balance includes the following amounts:
a) Depreciation expense of $250,000. For tax purposes, the controller tells you that the opening undepreciated tax balances (UCC) are as follows:
Class 8: $325,478
Class 10: $43,420
There were no additions or dispositions of Class 8 or Class 10 -property during the year.
b) Interest on late income tax payments of $1,500
c) New financing costs for the new bond issuance $4,000.
d) Charitable donation to the United Way/ Canada of $5,500.
In addition, D.M. Paper Company provides you with the following other information:
2020 Other Income includes Interest Revenue $105,000 from Canadian sources; Portfolio Dividend $48,000 from Devon Corp. Canadian Taxable crop; Gain on Sale of property (other than depreciable) $28,500 (Property original cost was $22,250; net book value $13,750; and sold for $42,250) (Those amounts will be deducted if allowed)
Amounts carried from 2005:
- Net-capital loss of $20,000
- Non-capital loss of $ 11,250
- Charitable donation 3,000
During 2020, a total of $97,000 in taxable dividends was paid to the shareholders of D.M. Paper Company. Noting that non-eligible RDTOH balance at Jan 1, 2020 was $200,000 and there is no dividend refund during 2019.
D.M. Paper Company is associated with another 3 corporation, therefore agree to share the annual SBD business limit (25% each).
Required - Show all the calculations used to provide the required information, including those for which the result is nil. Round your answers to the nearest whole number.
Calculate D.M. Paper Company's minimum Net Income for Tax Purposes and Taxable Income for the year ending December 31, 2020.