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)?
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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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.
Transcribed Image Text:Part 1 (ITA 3)
Division B Net Income to Division C Taxable Income to Taxes Payable for Individuals
ITА 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 Income
ITА 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 Income
ITA 3 (d)
Losses in current year from Bins 1, 2, 4
= Division B Net Income
Equivalent to Capital Gains Deduction for Employee Stock Options
ITA 110
Payments 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 111
Losses from other years (carrying basket Bin #3 limited to Net Capital Income included in ITA 3 (b)
= Division C Taxable Income
x Applicable Tax Rates
ΙΤΑ 118
Tax Credits
= Division E Taxes Payable for Individuals
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