Question 3 - show calculations) You are working at Grey Company. You purchased a house in 2020. Gray Company gave you a housing loan on May 1, 2020 for $80,000 at a rate of 2 percent interest. You pay the interest on the loan every month. The 2020 prescribed interest rates are as follows: First quarter 5% Second quarter 4% Third quarter 3% Fourth quarter 3% What is your taxable benefit on the above loan for 2020?A) Nil.B) $267.40.C) $670.68.D) $1,073.97.E) $2,147.95.F) $667.40. 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

Taxable benefit for Second Quarter =$80000×(4%-2%)×212=$80000×2%×16=$267

Answered: You are working at Grey Company. You…

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Question 3 - show calculations) You are working at Grey Company. You purchased a house in 2020. Gray Company gave you a housing loan on May 1, 2020 for $80,000 at a rate of 2 percent interest. You pay the interest on the loan every month. The 2020 prescribed interest rates are as follows:

First quarter 5%

Second quarter 4%

Third quarter 3%

Fourth quarter 3%

What is your taxable benefit on the above loan for 2020?

A) Nil.
B) $267.40.
C) $670.68.
D) $1,073.97.
E) $2,147.95.
F) $667.40.

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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