Question

In the current year C Inc. had the following expenses: $2,000 legal fee to register a mortgage on its office building, $9,000 for landscaping the land around the office building and $1,000 interest paid to CRA for late tax instalments. The legal fee and landscaping expenses were accrued and paid in the following year. Determine the amount that C’s net income for tax purposes will decrease in the current year due to these expenses.

Answer 1

a)Legal fees to register mortgage on office building is a capital expenditure thus added to cost of office building on which depreciation will be claimed .

Amount deductible : 0

b)landscaping around the office building is also a capital expenditure thus not deductible for tax purpose

Amount deductible :0

c)Interest paid for late tax payment is for violation of law thus not allowable or deductible

Amount deductible :0

the amount that C’s net income for tax purposes will decrease in the current year due to these expenses. : 0