Reference no: EM132928890

Question - Bison Consulting is a sole proprietorship owned by Kevin Bison in London, Ontario. For the year ended December 31, 2020, Kevin calculated Net Income for Bison Consulting of $70,000. Kevin determined this amount using generally accepted accounting principals.

Other Information:

The following amounts were included in the accounting expenses:

Amortization expense $1,200

Golf Club Dues for entertaining clients 6,000

Charitable Donations 4,000

Business meals & entertainment 8,000

Advertising 3,000

Also included in the expenses was $3,000 paid to his daughter Karen for washing his car once a week for the summer. Monies were to be put away to help her with her tuition for college in the fall.

Kevin and his wife Kathy attended a consulting convention in Vancouver in the fall. Total cost deducted for this convention was $4,000 (no meals were deducted). While Kevin was at the convention, Kathy was site seeing around Vancouver. Cost associated with Kathy making the trip were $1,500.

Kevin's only depreciable property was furniture & fixtures. The UCC balance for January 1, 2020 was $3,000. There were no additions or dispositions during the year.

Kevin maintained a home office in his basement where he regularly met with clients. The size of this office was 144 square feet, and he had a total square footage of 2880. The following expenses related to his home office:

Utilities $2,200

Property Tax 1,000

Mortgage Interest 4,000

Insurance 800

Maintenance & repairs 500

Required - Using the above information, calculate the minimum Net income for tax purposes, Kevin must report on his 2020 tax return. (show all workings). Explain anything you omitted from the calculation.