Recommend the annual shareholder tax plan

Reference no: EM133152105

Question: Thank you for applying for the senior tax analyst position with TD Tax Services. As part of our initial assessment process, please find attached the following "mock" scenario, which you can expect to face regularly from our clients and internal partners in this role.

Your clients Tom and Linda (T1-T2 clients) called and provided the following information, they need your response within 48 hours, as they are trying to finalize their year-end tax planning before heading overseas for a few months. Please review, analyze and provide a recommendation to them, along with any planning opportunities available for them to consider.

Here is the information you obtained on the call from clients Linda and Tom:

Tom (retired) Age 72 - 2021 income, no material changes from PY. Defined Pension: $67K per annum.
Linda (retired) Age 55 - 2021 income similar, except for Defined Pension - $56,000 per annum. She is no longer employed.
Realized Gain Loss report in Corporation F21 YTD is $50,000 and they have no RGL personally YTD.
They would like to make a $12,000 charitable donation to TD''s Private Giving Foundation in 2021.

They have the following questions to finalize their 2021 tax planning:

Recommend the annual shareholder tax plan for Tom and Linda, understanding their goal is to draw down as much as possible tax effectively from their corporation each year.

In 2020 the company paid a $125,000 ordinary dividend to Linda and zero to Tom.

They own different classes of common shares and in their investment holding company (T&L Investments). Tom Class A and Linda Class B.

Should they make the $12K PGF donation from their corporation or personally?

To assist you with this analysis, please find attached the following for your perusal:

December 31, 2020 T2 Summary
2020 T1 Summary for Tom and Linda

Please analyze their situation, in addition provide any other planning opportunities available based on the information provided. Please note TOSI does not apply in this situation. Kindly draft an email response for our review/send to the clients by their requested deadline, along with any working paper files to support your calculations.

Attachment:- Investment Corp.rar

Reference no: EM133152105

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