A Snapshot of a Portion of Rancho Inc Other Information Includes:
1) Rancho Had a Non-Eligible RDTOH (NERDTOH)

question 11

Essay

A snapshot of a portion of Rancho Inc.'s T2 Summary shows the following:
$\begin{array}{|l|r|}\hline\text { Taxable income }\\ \hline \text { Net income for tax purposes } & 352,500 \\\hline \text { Charitable donations and gifts } & 70,000 \\\hline \text { Taxable dividends } & 12,500 \\\hline \text { Losses of prior years } & 0 \\\hline \text { Other adjustments } & 0 \\\hline \text { Taxable income }= & 270,000\\\hline \text { Part I tax } & \\\hline 38 \% \text { of taxable income } & 102,600 \\\hline \text { Surtax } & 0 \\\hline \text { Recapture of investment tax credit } &0\\\hline \text { Refundable tax on CCPC investment income } & 2,133 \\\hline\text { Active business income } 320,000\\\hline \text { Small business deduction } & 39,900 \\\hline \text { Federal tax abatement } & 27,000 \\\hline \text { Manufacturing and processing deduction } &0 \\\hline \text { Foreign tax credits } & 0 \\\hline \text { Investment tax credits } &0\\\hline \text { Other deductions and credits } & 5,200 \\\hline \text { Part I tax }= &32,633 \\\hline\end{array}$

Other information includes:
1) Rancho had a non-eligible RDTOH (NERDTOH) balance of $9,000 at the end of 2019.
2) The dividend refund from the NERDTOH in 2019 was $3,000.
3) The dividends received were non-eligible, and were paid by Greens Inc., a connected CCPC.Rancho owns 25% of Greens.Greens received a dividend refund of $40,000.
4) Rancho paid taxable non-eligible dividends of $15,000 in 2020.
5) Rancho is associated with Turtle Co., which has only active business income.
6) Rancho has aggregate investment income which remained at $20,000 for both 2019 and 2020.
7) The amount in 'Other deductions and credits' in the T2 Summary represents the General Rate Reduction.
(The total taxable capital of Rancho and Turtle is less than $10 million, and there is no specified corporate income.)
Required:
A.How much is Rancho's Part IV tax in 2020?
B.Calculate the amount of the small business deduction allocated to Turtle in 2020.
C.Determine Rancho's NERDTOH balance at the end of 2020.
D.Calculate Rancho's dividend refund in 2020.
E.Prove the amount shown in the T2 summary for the General Rate Reduction.
(Round all amounts to zero decimal places.Work must be shown for marks to be awarded.)

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