Reference no: EM132998995
2021 was an intense year for many people, and your client Johnny, is no exception. Johnny was laid off in 2020 due to a downturn at his place of employment.
He applied for and received employment insurance benefits for the period of October 2020 through March 2021. Total employment insurance benefits received in 2021 were $6,000.
However, Johnny had some unexpected expenses during early 2021 that his EI benefits would not cover. He sold his entire stock portfolio to make ends meet. The capital gain on the sale of the shares was $3,000.
It turns out that he did not raise enough cash with the sale of the shares, and so he was forced to sell an investment in bonds he had been holding for years. The capital loss on the bonds was significant, $5,000.
During his time off work, Johnny used the time to retrain himself as a computer programmer. He had always messed around with computers in the past, but really used his time off to pivot careers from the restaurant service industry into a new vocation. He enjoyed it, and was able to find a full-time job in April of 2021. Furthermore, Johnny had started "Bucks' Computer Repair" business on the side, and was keeping quite busy fixing laptops, tablets, and computers. Between the new job and the side business, 2021 was shaping up to be a great year for Mr. Bucks. Johnny's net income from his job (employment) for 2021 will be $60,000 and his net income from Bucks' Computer Repair will be $8,900.
Other than the employment and business income, Johnny also tells you that the interest earned on the bonds before sale is $800 for 2021. Furthermore, he tells you he has a $6,000 net capital loss carryforward and $1,200 non-capital loss carryforward from 2020.
Required -
Problem 1: Johnny Bucks has come to you for help in calculating his Net Income for Tax purposes and Taxable Income for 2021. Assume all the information he has given to you above is correct
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