Question 2 – During 2020, you receive from your employer:• a $400 gift certificate.• a $600 chair for outstanding customer service.• 4 coffee mugs that cost the employer $20.• an Easter basket of gourmet treats valued at $245.• a cash award of $300 in recognition of 10 years of service with the employer. What is the amount that will be included in your 2020 Net Income (Division B)?A) $800.B) $1,000.C) $1,300.D) $700. Part 1 (ITA 3)Division B Net Income to Division C Taxable Income to Taxes Payable for IndividualsITА 3(a)+ Bin #1- Net Employment - losses carry forward 20 years and carry back 3 years (carrying baskets)+ Bin # 2 - Net Business & Property – losses carry forward 20 years and carry back 3 years (carrying baskets)+ Bin # 4 - Other IncomeITА 3 (b)+ Bin # 3 – Net Capital – losses carry forward for infinity and carry back 3 years (carrying basket)IТА З (c)- Bin # 5 - Other Deductions= Sources of IncomeITA 3 (d)Losses in current year from Bins 1, 2, 4= Division B Net IncomeEquivalent to Capital Gains Deduction for Employee Stock OptionsITA 110Payments included to calculation Division B but not included for Division C (e.g. social assistance)- Losses from other years (carrying baskets Bin #1 & 2)ITA 111Losses from other years (carrying basket Bin #3 limited to Net Capital Income included in ITA 3 (b)= Division C Taxable Incomex Applicable Tax RatesΙΤΑ 118Tax Credits= Division E Taxes Payable for Individuals

Net Income of Division B = Gift certificate + chair for outstanding customer service + cash reward…

During 2020, you receive from your employer: • a $400 gift certificate. • a $600 chair for outstanding customer service. • 4 coffee mugs that cost the employer $20. • an Easter basket of gourmet treats valued at $245. • a cash award of $300 in recognition of 10 years of service with the employer. What is the amount that will be included in your 2020 Net Income (Division B)?

During 2020, you receive from your employer: • a $400 gift certificate. • a $600 chair for outstanding customer service. • 4 coffee mugs that cost the employer $20. • an Easter basket of gourmet treats valued at $245. • a cash award of $300 in recognition of 10 years of service with the employer. What is the amount that will be included in your 2020 Net Income (Division B)?

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter3: Taxes On The Financial Statements

Section: Chapter Questions

Problem 4RP

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