Reference no: EM133189660

Tax Software Problem

RadionFaux Industries Ltd. (RIL) is a Canadian controlled private corporation located at 123 ABC Street in Ottawa, Ontario, K4E 1A1. Its Ontario corporation tax account number is 1234567. Its phone number is (613) 111-1111. It was incorporated on February 24, 1990, in Ottawa

The government‘s Crown copyright no longer permits us to use fabricated business numbers in sofwvare problems. To reduce the number of ProFile‘s error messages because of this, enter NR (for not registered) in the Business Number field.)

The company has 1,000 shares of common stock issued and outstanding, all of which are owned by Ms. Margaret Ottawa (SIN 527-000-301).

Ms. Ottawa, the president and director of the company, is the person who should be contacted with respect to matters concerning the company's books and records. She is the authorized person as well as the signing officer.

RIL is a retailer of pet supplies. All of its sales occur within Canada. It has net assets of $235,000 on December 31, 2020. This includes a few investments that Ms. Ottawa inherited from her father two years earlier.

RIL owns all of the 500 common shares of OttawaFaux Inc., which holds most of the invest- ments Ms. Ottawa inherited from her father. The common shares have a book value of $1,200,000. OttawaFaux Inc. has the same location and phone number as RadionFaux Indus- tries Ltd. OttawaFaux Inc. has a December 31 fiscal year end. Enter NR (for not registered) in the Business Number field for OttawaFaux Inc.

OttawaFaux Inc. is also involved in earning active business income through the breeding and sale of championship dogs. It has total assets of $2,000,000 and total revenues for 2020.

Required: Prepare the federal corporate tax return for RIL for the 2020 taxation year using the Profile T2 corporate software program. Determine the eligible and non-eligible RDTOH and '. ' comment on whether the designation of $25,000 of eligible dividends was a good idea. If not, indicate the designation that you would have made. On the ProFile schedule titled " Info'' the Filing question " Complete return from GIFI? " is answered Yes by default: click No. Ignore the '. GlFl requirements except as follows:

On GlFl Schedule 125:
• Input the total revenues less the gain on sale of shares $685,000) on the line "Total Sales of Goods and Services" (Code 8000).
• Choose " Realized gains/losses on sale of investments " (Code 8211) from the drop- down menu under Code 8089 and input the gain on sale of shares.
• Choose " Purchases/cost of materials" TCode 8320) from the drop-down menu under Cost of Sales and input the cost of goods sold.
• Choose "Amortization of tangible assets" TCode 8670) from the drop-down menu under Operating Expenses and input the amortization expense.
• Choose "Other expenses" (Code 9270) from the drop-down menu under Operating
• Expenses and Other Operating Expenses. On GlFl Schedule 100:
• Input the net income figure of $235,000 as "Cash and deposits" (Code 1000) in order to make the total assets equal to the total liabilities and equity.

Although this will not properly complete the GIFI statements, it will eliminate the warning mes- sages that would otherwise be generated when the net income figure and amortization expense are input on Schedule 1. These GlFl entries will have no effect on the calculations in the tax return.

Attachment:- Tax Case.rar