Question

# The FG Company had Net Income For Tax Purposes for the year ending December 31, 2019...

The FG Company had Net Income For Tax Purposes for the year ending December 31, 2019 of \$275,000. This amount included \$13,720 in taxable capital gains, as well as \$15,600 in dividends received from taxable Canadian corporations. Also, during 2019, the Company made donations to registered charities of \$9,100.

At the beginning of the year, the Company had available a non-capital loss carry-forward of

\$74,000, as well as a net capital loss carry forward of \$20,000 [(1/2) (\$40,000)].

Required: Determine the Company’s minimum Taxable Income for the year ending December 31, 2019 and the amount and type of any carry forwards available at the end of the year.

 Description Amount

 Description Amount in dollars \$ Net Income for Tax Purpose \$275,000 Less: Dividend received \$15,600 Less: Charitable donation \$9,100 Less: Non Capital Loss \$74,000 Less: Capital Gain \$13,720 Taxable income \$162,580

Explanation:

Net Income for Tax Purpose - Dividend received - Charitable donation -  Non Capital Loss - Capital Gain

= \$275,000 - \$15,600 - \$9,100 - \$74,000 - \$13,720

=\$162,580

Calculating Carry forward

Capital loss carry forward - Capital Gain

= \$20,000 - \$13,720

=\$6,280

or

Calculating Carry forward

Capital loss carry forward - Capital Gain

= \$40,000 - \$13,720

=\$26,280

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