Assignment Problem Six - 15 (Comprehensive Case Covering Chapters 1 to 6) Personal Information Hillary Hawk has been divorced for some time and has sole custody of her two children, Mark and Mandy. Mark is 13 and Mandy turned 18 on July 1, 2020. Because her former husband has disappeared, she receives no child support or spousal support. Mark is in high school and has no income of his own. During 2020, her daughter, Mandy, was enrolled part time at a local college. Hillary agreed to pay her tuition of $1,800 as long as Mandy transferred the related credit to her (Hillary). Mandy's 2020 Net Income For Tax Purposes is $6,300. During the year, Hillary paid $8,000 for orthodontic work (braces) for Mark. She was reimbursed 50 percent of the amount through her employer's dental and health plan. During 2020, Hillary made $2,300 of contributions to registered charities. Employment Information Hillary is a sales representative for Bronze Age Inc. (BA), a Canadian public company that specializes in the marketing of metal sculptures. Hillary's employment contract specifies a base salary of $100,000, plus a commission of 2 percent of her annual cash sales. For 2020, the applicable amount of cash sales is $4,800,000. For 2020, Hillary's employer withheld the following amounts from her salary: RPP Contributions 6,200 CPP Contributions 2898 El Premiums 856 Premiums For BA's Dental And Health Plan* 3200 Professional Association Dues 2700 Federal Income Tax 39400 *The plan is funded 50/50 by the employees and the employer. Hillary is covered by BJXs group term life insurance. Her coverage is equal to her annual base salary ($100,000 for 2020). BA pays a premium to the insurance company of $3 for every $1,000 of coverage. Because of her outstanding sales record, Hillary received the Salesperson Of The Year Award. This award provided her with a cash payment of $1,000, plus an iPad Pro that cost BA $1,700. During 2020, BA provides Hillary with an automobile that it leases for $650 per month. The automobile was available for her personal use throughout 2020. During this period, she drove the car 42,000 kilometres, only 4,000 of which related to personal matters. While BA pays $2,800 to provide Hillary with insurance on the vehicle, they do not pay any of the other operating expenses. Hillary is responsible for her salesperson expenses (including the automobile operating expenses). During 2020 she incurred the following: Total Automobile Expenses (Excluding Insurance) 8500 Meals And Entertainment With Clients 5800 Hotels 3200 Hillary meets all of the conditions of ITA 8(1 )(f) of the Income Tax Act (deductible salesperson expenses). Last year, in July 2019, Hillary's employer transferred her from the Kelowna office to the Vancouver office. All of her moving expenses were paid for by her employer. Because she needed to sell her Kelowna home quickly, a $38,000 loss was incurred on the sale. While her employer agreed to compensate Hillary for $25,000 of this loss, the payment was not received until February 2020. In April 2018, Hillary's employer granted her the right to purchase up to 3,000 shares of BA for $27 per share under the employee stock option plan. At the time the option was granted, the shares were trading for $25. On March 1, 2020, when the shares were trading at $29 per share, she exercises all of these options. In December 2020, she sold 2,000 shares of the acquired option shares for $33 per share. In order to purchase the 3,000 shares, Hillary negotiated an interest free loan from her employer for the purchase price. The loan was received on March 1, 2020. Joan repaid the loan on December 31, 2020. Business Information In addition to her employment income, Hillary has income from an unincorporated business that advises individuals and corporations on purchases of various types of art for their homes and offices. Hillary uses 15 percent of the space in her Vancouver home for this business. Her 2020 household expenses include the following: All Utilities 4200 Property Taxes 6500 Home Internet Service 900 Maintenance 2400 Insurance On Her Home 2100 Mortgage Interest 11500 Hillary estimates only 10 percent of the internet use was for her business because her children stream a lot of entertainment on a variety of devices. She does not claim CCA on her home as she realizes that if she did, this would result in future recapture and capital gains implications. On January 1, 2020, the business had the following UCC balances: Class 8= 6912 Class 10.1= 12495 During 2020, she acquires additional Class 8 assets at a cost of $12,000. These assets replaced assets with a capital cost of $9,000. The replaced assets were sold for $1,200. The Class 10.1 asset had a cost $36,000. It was sold during 2020 for $16,000 and replaced with a new vehicle with a cost of $41,000. Both vehicles were used solely for her business. She uses the employer provided automobile for the little bit of personal travel that she does do. For 2020. the net income of this business. determined using generally accepted accounting principle was 63000: Amortization Expense 5200 Business Meals And Entertainment6400 Work Space In The Home Costs nil Required: For the 2020 taxation year. calculate Hillary's minimum: 1. Net Income For Tax Purposes, 2. Taxable Income, 3. Federal Tax Liability. In determining these amounts, assume the prescribed rate during all four quarters of 2020 is 2 percent. Ignore GST, PST, and HST considerations.