Rodem Inc. is a Canadian controlled private corporation. The Company began operations on January 1, 2017 and uses a taxation year that ends on December 31. The following data summarize the operations for the years from 2017 to 2020.
| 2017 | 2018 | 2019 | 2020 | |
| Income(loss) from business | $110,000 | ($48,000) | $185,000 | ($42,000) |
| Charitable Donations | 3,200 | 5,800 | 4,100 | 2,900 |
| Capital Gains (Losses) On Land | 18,000 | (9,000) | 12,000 | 2,000 |
| Capital Gains (Losses) on shares | – | – | – | (8000) |
| Business investment loss | (56,000) | – | (15,000) | – |
| Dividends from Taxable Canadian Corporations | 11,000 | 19,000 | 18,000 | 12,000 |
The company has a net capital loss balance of $9,000 which arose in 2013. It is the policy of the Company to deduct charitable donations prior to any loss carry overs. It also has a policy of minimizing non-capital loss carryovers, as opposed to net capital loss carryovers.
Required:
1. Compute the taxable income for the years indicated according to the ordering rules in section 3 and show the amounts that would be available at the end of the year. Organize your answers line-by-line across years, rather than one year at a time.
2. Compute Part I federal tax payable for 2020. Assume that the company’s active business income is $120,000 and 35% of taxable income was attributed to the U.S.
3. Show all calculations whether they are necessary to the final answer.
