Chartered Tours Inc

question 8

Essay

Chartered Tours Inc.(CTI)started operations this year and had a net income for tax purposes of $800,000.(Chartered Tours Inc.operates in a province which has a provincial tax reduction on income earned from manufacturing and processing.)
CTI also:
a)made a contribution of $25,000 to eligible charities;
b)received $30,000 in dividends from taxable Canadian corporations;
c)recognized manufacturing and processing profits of $250,000;
d)had active business income of $770,000; and
e)did not receive any taxable dividends from other corporations,or pay out any taxable dividends in the previous year.
For tax purposes,CTI is associated with Rocky Mountain Hikers Inc.(RMHI).RMHI was able to use $310,000 of the small business deduction.
Required:
Calculate the following,ignoring provincial taxes:
a)CTI's taxable income
b)CTI's small business deduction
c)The M & P deduction available to CTI
d)CIT's general rate reduction
e)The balance in CTI's GRIP account at the end of the year

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Definitions:

Duty To Pay

The obligation to make payment for goods received, services rendered, or a debt incurred.

Trucking LLC

A legally recognized business entity that operates in the transportation industry, specifically focused on the movement of goods by truck.

Specified Payment

A payment that has been defined in terms of amount, recipient, timing, and conditions under a contract or agreement.

Breach

The violation or breaking of a law, duty, or other form of agreement.