Compute Dougs Division B income

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Reference no: EM132761307

Question - Doug Ford, a computer analyst is a 57-year-old married man with two children. Doug's wife, Jane, is a homemaker and has never worked outside of the home. In April of 2020, Doug was laid off from his job at a software development company in London, Ontario, after being employed by the company for 20 years, starting January of 2000. Within a month, he had been offered a position at IBM Ltd., a company located in Toronto, Ontario. The company provided him with a $4,000 moving allowance to relocate his family to Toronto. Doug purchased a new residence in Toronto in May of 2020. The family moved into the home on May 15, 2020. Doug incurred the following expenditures related to the move:

Gas (120 km per the odometer) $40

Rental of moving van $700

Land transfer tax on new residence $1,500

Legal fees related to purchase of new house $600

Doug had purchased the London home in 2017 for $420,000. He was finally able to sell it on August 1, 2020 for $590,000. Doug incurred the following expenditures related to the London home in 2020:

Legal fees related to sale $900

Real estate commission on sale $6,000

Insurance from January 1 to July 31 $40 per month

Property taxes from January 1 to July 31 $300 per month

Utilities from January 1 to July 31 $90 per month

Gardening from May 15 to July 31 $600

When Doug was laid off, he was paid severance of $50,000, all of which he transferred into his registered retirement savings plan (RRSP). Doug did not make any other RRSP contributions during the year.

Doug earned total employment income of $140,000 for 2020 ($50,000 in his old job and $90,000 in his new position). Last year, Doug's Division B income consisted of $190,000 of employment income, $41,000 of investment income, and $5,000 of net taxable capital gains. His unused RRSP deduction room as of December 31, 2019 was $18,000. He has a nil pension adjustment for 2019.

Doug's only other sources of income and expenses in 2020 consisted of:

Dividends on shares of Canadian Pacific (CP) Railway Limited $28,000

Interest accrued on an 8% $20,000 GIC acquired May 1, 2020, maturing April 30, 2025 $3,074

Interest paid from January 1, 2020 to December 31, 2020 on a line of credit used to acquire the shares in CP Railway Limited $5,000

Interest on mortgage for London home $17,000

Capital gain on the disposition of CP Railway Limited shares on June 1, 2020. The proceeds were used to help purchase the London home $12,000

Payments to day camp for Doug's 13-year-old daughter, Mary $3,500

Required - Compute Doug's Division B income for 2020. Provide explanations of inclusions and omissions if not self-explanatory. Ignore any Leap year effects.

Reference no: EM132761307

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