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Sponge Todd Square Corp (STSC) is a corporation resident in Canada that has asked you to...

Sponge Todd Square Corp (STSC) is a corporation resident in Canada that has asked you to prepare a calculation of their corporate Part I taxes owing for the 2018 taxation year. They have calculated their taxable income as follows:

Active business income - $650,000
Interest Income (passive) - $70,000
Foreign income - $80,000
Losses carried forward (100,000)
Taxable Income $700,000

STSC is associated with another corporation. The other corporation has already used $150,000 of the small business deduction limit.

Please show all your work.

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Answer #1

STSC

Income from Active Business - $6,50,000 : Interest Income ( Passive ) - $70,000 : Foreign Income - $ 80,000 : Losses from Previous Year - $1,00,000

Also, the company claimed small business deduction limit. So tax rate is 10%

Tax = $7,00,000 * 10% = $70,000

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