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    CHPT 13 Example Problems

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    Hanh Tran
    The company built a house for its shareholder-officer and expensed the costs as promotion expenses. This would result in tax consequences for the individual and company. A property management company owned by an individual had its repair crew spend several days making repairs to the individual's cottage. If discovered in an audit, the CRA would likely reassess this transaction. An individual owned company loaned money to the individual owner that was still outstanding at the end of the following year. This would result in tax consequences for the individual owner. A company loaned money to its shareholder president for the purchase of a vehicle. While other employees were eligible for similar loans, the shareholder would receive a tax

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    CHPT 13 Example Problems

    Uploaded by

    Hanh Tran
    22 views4 pages
    The company built a house for its shareholder-officer and expensed the costs as promotion expenses. This would result in tax consequences for the individual and company. A property management company owned by an individual had its repair crew spend several days making repairs to the individual's cottage. If discovered in an audit, the CRA would likely reassess this transaction. An individual owned company loaned money to the individual owner that was still outstanding at the end of the following year. This would result in tax consequences for the individual owner. A company loaned money to its shareholder president for the purchase of a vehicle. While other employees were eligible for similar loans, the shareholder would receive a tax

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    The company built a house for its shareholder-officer and expensed the costs as promotion expenses. This would result in tax consequences for the individual and company. A property management company owned by an individual had its repair crew spend several days making repairs to the individual's cottage. If discovered in an audit, the CRA would likely reassess this transaction. An individual owned company loaned money to the individual owner that was still outstanding at the end of the following year. This would result in tax consequences for the individual owner. A company loaned money to its shareholder president for the purchase of a vehicle. While other employees were eligible for similar loans, the shareholder would receive a tax

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
    Download as pptx, pdf, or txt
    22 views4 pages

    CHPT 13 Example Problems

    Uploaded by

    Hanh Tran
    The company built a house for its shareholder-officer and expensed the costs as promotion expenses. This would result in tax consequences for the individual and company. A property management company owned by an individual had its repair crew spend several days making repairs to the individual's cottage. If discovered in an audit, the CRA would likely reassess this transaction. An individual owned company loaned money to the individual owner that was still outstanding at the end of the following year. This would result in tax consequences for the individual owner. A company loaned money to its shareholder president for the purchase of a vehicle. While other employees were eligible for similar loans, the shareholder would receive a tax

    Copyright:

    © All Rights Reserved
    Download as PPTX, PDF, TXT or read online from Scribd
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    You are on page 1of 4

    Example Problem 13-1

    Smart Manufacturing Ltd build a 21 room house for


    its principal shareholder-officer on a country
    property owned by him. The company expensed the
    costs as promotion expenses on the basis that he
    would use the property to entertain distributors of
    the company’s products to ensure continuing outlets
    for the company’s outlets.

    Required: Consider the tax consequences to the individual and the


    company in this case.
    Example Problem 13-2
    Mr. Edwards owns all of the outstanding shares of
    Edwards Inc., a large property management company,
    which manages over 20 large apartment buildings. One
    spring Mr. Edwards had the repair crew spend five days
    at his cottage making extensive repairs to the building.
    The value of these repairs was $8,500. Because of this
    busy schedule, Mr. Edwards apparently forgot to tell his
    controller to send him a bill for the work done.

    Required: If the CRA were to discover this transaction


    during their audit, how would they reassess?
    Example Problem 13-3
    Sally owns all the outstanding shares of Sally Inc. On
    July 15, 2019, Sally Inc has a December 31 year-end.
    On Jan 1, 2020 the loan is still outstanding.

    Required:
    • What are the income tax consequences to Bob?
    Example Problem 13-5
    Mr. Porter owns all the outstanding shares of Run For Your Life Ltd, a
    health and fitness club. He is the company president. On July 1,
    2017 the company made a loan to Mr. Potter of $19,500 which he
    used to acquire an automobile at FMV. All of the other 6 employees
    are eligible to receive this type of loan on the same terms and four
    have, in fact, taken advantage of the opportunity. He requires the
    car to carry out his business duties. The loan is repayable in two
    equal instalments starting July 2018 without interest.

    Required:
    • Does Mr. Potter receive a taxable benefit in 2017?
    • How is the company impacted by the loan?

    Assume prescribed rate of 4%.

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