Which of the Following Scenarios Is Not an Allowable Tax

question 8

Multiple Choice

Which of the following scenarios is not an allowable tax transaction?

• A)The taxable income of ABC Co., (a Canadian controlled private corporation), is reduced by the amount of dividends received from other taxable Canadian corporations.
• B)An individual's taxable income on their T1 tax return is reduced by the amount of dividends received from a taxable Canadian corporation.
• C)A donation of $5,000 made to a registered charity by XYZ Co.in the year is used to reduce XYZ's $100,000 net income for tax purposes to a taxable income of $95,000.
• D)Small Co., (a Canadian controlled private corporation), has a net income for tax purposes of $125,000 in 2020, an $8,000 non-capital loss from 2019, and $10,000 of taxable dividends received from a Canadian corporation in 2020.The non-capital loss and the dividends can both be deducted from Small Co.'s net income for tax purposes in 2020.

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Definitions:

Tax Rate

The percentage at which an individual or corporation is taxed, determining the portion of income or profits that must be paid to the government.

Cost of Goods Sold

The direct costs attributable to the production of the goods sold in a company, including the material and labor costs.

Conglomerates

Large corporations that own a collection of different companies across various industries.

Seasonal Nature

Describes fluctuations in business activity, revenue, or profits at certain times of the year due to seasonal factors such as holidays or weather changes.