Last Name: First Name: Student Number

Taxation I
FMGT 3410 – Introduction to Taxation I – Assignment 4
Instructor: Jayce Bam

Date: 11/30/2020 Due: 2020-12-08 at 11:59PM Total Excel Sheets: 3 (including cover)

Special Instructions:
1. Before you begin answering any questions type your name at the top this page of the exam. If your name is not
on your submission, it may not be marked.

2. All excel sheets of the exam must be handed in. Do not create any additional sheets. Do not delete any sheets. Do
not hide any sheets.

3. Only responses recorded in the boxes from columns A to T of each sheet will be marked.
FMGT 3410 - Question 1

Question Six-11 from the textbook.

Your Written Response

1. Office and content insurance is deductible, as well as malpractice coverage;
however, life insurance premiums (unless tied to financing) are not deductible.

2. Collection agency costs are reasonable, and for the purpose of earning business
income, thus are deductible.

3. Charitable donations are not deductible, instead they are eligible for the calculation
of credits against taxes payable.

4. So long as the amount is reasonable, it is deductible.

5. Convention cost for Dr. Sweet is deductible; if Mr. Sweet's attendance is connected
with a business purpose (he does work in the company) then their portion would be
deductible as well. All meals are deductible at 50%.

6. Membership fees are not deductible, but court time with patients would constitute
entertainment, and is 50% deductible.

7. Accounting and legal fees relating to the reassessment are deductible; however
interest on late payments is not.

8. Lottery tickets are not deductible; earnings would not be taxable either though.
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Your Calculations
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FMGT 3410 - Question 2

Question Six-9 from the textbook.

Your Written Response

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Your Calculations

Reonciliation of net income for accounting to net income for tax

Net Income for Accounting $ 576,183

Add:
Income tax 217,000
Amortization 550,000 F
Accounting bad debt expense 16,750 A
Prior year reserver for bad debts 13,000 A
Charitable donations 27,000
Bonuses paid - *
Golf club dues 14,400
Meals and entertainment 16,000
Personal meals 5,000
Staff BBQ - *
Production sponsorship - *
US advertising - *
Software 38,000
Amending articles of incorporation 6,000 D
Convention 17,000 B
Penalties and interest 2,000
Other interest - *
Non-deductible travel 1,570 C
Accounting loss on franchise 17,000
Taxable capital gain on shares 76,354 E
Total 1,017,074 1,017,074

Deduct:
Actual bad debt write-off 11,750 A
Current year bad debt reserve 15,000 A
Capital cost allowance (maximized) 251,093 F
Terminal loss 5,000 F
Landscaping 35,000
Total 317,843 317,843

Net income for tax purposes $ 1,275,414

* Deductible accounting values

Note A Reverse the accounting estimate of bad debt, and deduct the actual amount
for tax. Prior year reserve must be reversed, with current year reserve allowed.
Note B Conventions are allowed, but it is hard to argue a convention in Thailand is
reasonable.

Note C Mileage is deductible at $0.58/km on the first 5,000km, and $0.52 thereafter.

Mileage paid 22,010

Deducitble mileage 20,440
1,570

Note D These fees are not deductible (over the $3,000 threshold), thus are capitalized
into Class 14.1 to be deducted via CCA.

Note E The capital gain has to be broken out from the NIFTP reconciliation, thus amount
booked to retained earnings needs to be reversed.

Note F Summary of CCA calculations

Class 1 Buildings 26,000

Class 1 New building 71,250
Class 6 7,800
Class 8 18,540
Class 10.1 16,178
Class 12 6,500
Class 14 - **
Class 14.1 450
Class 44 16,250
Class 50 20,625
Class 53 67,500
251,093

** Terminal loss $5,000

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rve allowed.
, thus amount
FMGT 3410 - Question 3

Question Six-5 from the textbook.

Your Written Response

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Your Calculations

Reverse reconciliation of net income for tax to net income for accounting

Net Income for Tax $ 613,300

Deduct:
Business meals and entertainment 8,450
US advertising 7,420
Damage to flower inventory - *Account and tax treatment the same,
Payment to customs official 19,460
Donations 6,300
Ending inventory 13,150
Amortization 46,350
Uniforms -
Delivery vehicle - accounting loss 10,200
Total 111,330 111,330

Add:
CCA 51,400
Terminal loss 4,155
Landscaping 15,200
Class 8 asset sale 3,000
Total 73,755 73,755

Net income for accounting $ 575,725

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count and tax treatment the same, thus no adjustment