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Problem 8-9 Sheila Ram 2.40 Shella Ram is a professional engineer in 2019, she sold her consulting business and retired. Her financial information for 2019 is outlined below. 1 On January 1, 2019, Ram sold her engineering consulting business to a senior employee. The business had been operated as a franchised proprietorship with a December 31 fiscal year end the following assets were sold Original cost Price Goodwill 34,000 44,000 Franchise 50,000 55,000 Library 4,000 2.000 Office equipment 8,000 2.000 The sale agreement called for cash proceeds for all assets, except the franchise, which required a down payment of $24.200 at closing with the balance payable on June 30, 2020 The accounts receivable of $108.900 were not sold but were retained by Ram for collection During 2019, Ram collected $99 200 of the receivables. The remainder is uncollectible On August 15, 2019, Rampaid $4.000 to a former employee for a bonus awarded on December 31, 2018. A review of Ran's 2018 income tax retum showed the following Undeprecated capital com Close 5,000 Class 14 20,000 Class 141 31000 Savod Help Save & Exit Sub On August 15, 2019, Ram paid $4,000 to a former employee for a bonus awarded on December 31, 2018. A review of Ram's 2018 income tax return showed the following Undepreciated capital cost Class 8 Class 14 Class 14.1 Reserve for bad debts Unused listed personal property loss 5,000 20,000 31,000 12.100 1,200 2 3 In January 2019, Ram sold her home for $230,000. She had acquired the house in 2012 for $200,000. In May 2019, she sold her Ontano vacation home, which she had acquired in 2015 for $50,000, for $140,000 She also sold an oll painting for $1.200 that originally had cost $400 Also, in 2019, she received $20,000 from the sale of her 10% interest in Quid a Canadian-controlled private corporation She had purchased the shares in 2012 for $60,500 Q operates a small manufacturing business, and at the time of sale, its assets were appraised as follows. Working capital $200,000 Manufacturing assets 300,000 Goodwill 100,000 Government bonds (three-year term 200,000 In 2019. Ram withdrew $54 500 from her RRSP 4 Required: Determine Ram's net income for tax purposes for the 2019 taxation year Served Required: 16 Determine Ram's net income for tax purposes for the 2019 taxation year its 3 01:31:42 Segment A Class 14.1 recapture - Good will Class 14 Recapture, franchise Class 8 terminal loss - Library and office equipment Reserve for bad debts Bad debt expense Bonus RRSP withdrawal Segment A total Segment B Net Taxable Capital Gain LPP - Oil Painting Taxable Capital Gains Franchise Taxable Capital Gains deferred - Franchise Taxable Capital Gains - Goodwill Taxable Capital gain-house Taxable Capital gain- vacation home Alowable Capital Loss Q Ld Shares Segment B sub total allowed $ 0 Problem 8-9 Sheila Ram 2.40 Shella Ram is a professional engineer in 2019, she sold her consulting business and retired. Her financial information for 2019 is outlined below. 1 On January 1, 2019, Ram sold her engineering consulting business to a senior employee. The business had been operated as a franchised proprietorship with a December 31 fiscal year end the following assets were sold Original cost Price Goodwill 34,000 44,000 Franchise 50,000 55,000 Library 4,000 2.000 Office equipment 8,000 2.000 The sale agreement called for cash proceeds for all assets, except the franchise, which required a down payment of $24.200 at closing with the balance payable on June 30, 2020 The accounts receivable of $108.900 were not sold but were retained by Ram for collection During 2019, Ram collected $99 200 of the receivables. The remainder is uncollectible On August 15, 2019, Rampaid $4.000 to a former employee for a bonus awarded on December 31, 2018. A review of Ran's 2018 income tax retum showed the following Undeprecated capital com Close 5,000 Class 14 20,000 Class 141 31000 Savod Help Save & Exit Sub On August 15, 2019, Ram paid $4,000 to a former employee for a bonus awarded on December 31, 2018. A review of Ram's 2018 income tax return showed the following Undepreciated capital cost Class 8 Class 14 Class 14.1 Reserve for bad debts Unused listed personal property loss 5,000 20,000 31,000 12.100 1,200 2 3 In January 2019, Ram sold her home for $230,000. She had acquired the house in 2012 for $200,000. In May 2019, she sold her Ontano vacation home, which she had acquired in 2015 for $50,000, for $140,000 She also sold an oll painting for $1.200 that originally had cost $400 Also, in 2019, she received $20,000 from the sale of her 10% interest in Quid a Canadian-controlled private corporation She had purchased the shares in 2012 for $60,500 Q operates a small manufacturing business, and at the time of sale, its assets were appraised as follows. Working capital $200,000 Manufacturing assets 300,000 Goodwill 100,000 Government bonds (three-year term 200,000 In 2019. Ram withdrew $54 500 from her RRSP 4 Required: Determine Ram's net income for tax purposes for the 2019 taxation year Served Required: 16 Determine Ram's net income for tax purposes for the 2019 taxation year its 3 01:31:42 Segment A Class 14.1 recapture - Good will Class 14 Recapture, franchise Class 8 terminal loss - Library and office equipment Reserve for bad debts Bad debt expense Bonus RRSP withdrawal Segment A total Segment B Net Taxable Capital Gain LPP - Oil Painting Taxable Capital Gains Franchise Taxable Capital Gains deferred - Franchise Taxable Capital Gains - Goodwill Taxable Capital gain-house Taxable Capital gain- vacation home Alowable Capital Loss Q Ld Shares Segment B sub total allowed $ 0

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