Rainbow Co. is a Canadian controlled private corporation with active business income of $350,000 in 2020. The company engages in retail and wholesale activities. Capital gains recognized by the company in 2020 totaled $84,000. Rainbow Co. will utilize a net capital loss carry-over of $28,000 on its 2020 tax return. Required:

FINANCIAL ACCOUNTING
10th Edition
ISBN:9781259964947
Author:Libby
Publisher:Libby
Chapter1: Financial Statements And Business Decisions
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Rainbow Co. is a Canadian controlled private corporation with active business income of $350,000 in 2020. The company engages in retail and wholesale activities. Capital gains recognized by the company in 2020 totaled $84,000. Rainbow Co. will utilize a net capital loss carry-over of $28,000 on its 2020 tax return.

Required:

Calculate the following for Rainbow Co. for 2020:

A. Net Income for Tax Purposes

B. Taxable Income

C. Part I Federal Tax - Identify amounts for 1) basic federal tax, 2) federal abatement, 3) refundable tax on investment income, 4) small business deduction, 5) general rate reduction), and 6) the total federal tax.

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