Solutions and Test Bank For Byrd & Chen\'s Canadian Tax Principles, 2020-2021 Edition, Volumes I and II with Study Guide By Byrd PDF

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Test Bank, Solution Manual, ebook For Byrd & Chen's Canadian Tax Principles, 2020-2021 Edition, Volumes I and II with Study Guide By Clarence Byrd, Ida Chen ; 9780136745105...

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Canadian Tax Principles, 2020-2021 Edition (Byrd/Chen) Chapter 1 Introduction to Federal Taxation in Canada Essay Questions 1 )Thema j ors our c eoff e der a lr eve nuesi st hepe r s ona li nc omet ax .I ndi c a t et hr eeot he rt ype soft a xe st ha t c ont r i but et of e de r alr e ve nue s . Ans we r :Theot he rs our c e soff e de r alr e ve nuest ha tar es howni nFi gur e1 1oft het e xta r e : •Cor por a t ei nc omet ax es . •Nonr es i de nti nc omet ax e s . •GST. •Cus t omsandi mpor tdut i es . •Ot here x c i s et a x e s . •EIpr emi ums . 2 )Wha ti st heme ani ngof" pe r s on"whe nt het e r mi sus e di nt heI nc o meTa xAc t ? Ans we r :I nt heI nc o meTa xAc t , t het er m" pe r s on"c anr e f e rt oa ni ndi vi dua l ,ac or por a t i on,orat r us t . 3 )Br i eflyde s c r i bet hepr oc e dur e sus edi nc a l c ul at i ngpr o vi nc i ali nc omet ax e sf ori ndi vi dual si npr ovi nc e s ot he rt hanQue be c . Ans we r :Pr o vi nc i ali nc omet ax e soni ndi vi dual sar ec a l c ul a t e db yappl yi ngapr ovi nc i a lr a t es c he dul et o t hes a meTa xa bl eI nc omefigur et ha ti sus edt oc a l c ul a t et hef e de r ali nc omet axf ori ndi vi dua l s . Pr ovi nc i a l c r edi t sa r et henappl i edt ot her e s ul t i ngfigur e . Thepr ovi nc i albr ac ke t sma ydi ffe rf r om t hef e de r a l br a c ke t s . I naddi t i on,pr o vi nc i alc r e di t sma ybedi ffer e ntt ha nt hef e de r alc r edi t s . 4 )TheCanadi a ni nc omet a xs ys t e mi sof t e nus e dt oac hi e vevar i ousec onomi cobj ec t i v e s . Gi v et hr e e e xa mpl e st ha ti l l us t r a t et hi spoi nt . Ans we r :The r ear emanye xa mpl e st ha tc oul dbeus e dhe r e .Thet e x tdi vi de st hem i nt or e s our c e a l l oc a t i on( e . g. , publ i che a l t hc ar e) , di s t r i but i oneffe c t s( e . g. ,f e de r alGS Tc r e di t ) , s t a bi l i z a t i oneffe c t s( e . g. , de fic i tr e duc t i on) , andfis c alf e de r al i s m( e . g. ,a l l oc a t i onst ova r i ousl e ve l sofgove r nme nt ) . 5 )Pr ovi deane xa mpl eofhow t a xa t i onpol i c yc anbeus e dt oi nflue nc er es our c ea l l oc a t i on. Ans we r :Exampl espr ovi de di nt het e x ta r easf ol l ows : •Taxr e ve nuesar eus edt opr ovi depubl i cgoodsands e r vi c e s . •Ex c i s et ax e sa r eus e dt odi s c our aget hec ons umpt i onofal c oholandt obac c opr oduc t s . The r ear e , of c our s e , ma nyot he re xa mpl e st ha tc oul dbec i t e d. 6 )Thegove r nme ntpa ysaCa nadaChi l dBe ne fitt ot hepar e nt sofc hi l dr e nwhoa r eunde r18ye ar sofa ge . Thepa yme nt sar er e duc e dbyape r c e nt a geofi nc omei ne x c e s sofas pe c i fie dl e ve l .Wha tobj e c t i v esa r e a c hi e ve dbyt hi sbe nefits ys t e m? Ans we r :TheCa na daChi l dBe ne fits ys t e mi sde s i gnedt oas s i s tf a mi l i eswi t hc hi l dr en.I twoul da ppe ar t ha tt hegov er nme nti se nc our a gi ngpe opl et oha vec hi l dr e n.Thef a c tt ha tt hebe nefit sa r er e duc e das i nc omei nc r e as e ss ugge s t st ha ti ti sal s odes i gne dt oas s i s tl owe ri nc omef a mi l i esc a r ef ort he s ec hi l dr en.

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For Full Chapters : [email protected] 7 )I ndi c a t et hr e edi s adva nt a ge sofat a xs ys t e mt ha tus e spr ogr e s s i ver a t e s . Ans we r :The r ear eanumbe rofpos s i bi l i t i e she r e .The yi nc l ude : •Pr ogr es s i ver a t e si nc r e as et hec ompl e xi t yoft hes ys t e m. •Pr ogr es s i ver a t e sar eunf ai rt oi ndi vi dua l swi t hhi ghl yvar i abl ei nc omes t r e ams . •Pr ogr es s i ver a t e sar eunf ai rt os i ngl ei nc omef a mi l yuni t s . •Pr ogr es s i ver a t e sl ea dt opr e s s ur ef orvar i oust ype soft a xc onc e s s i ons . •Pr ogr es s i ver a t e sdi s c our a gehi ghi nc omei ndi vi dua l sf r om maki nga ddi t i onale ffor t s . •Pr ogr es s i ver a t e senc our a get a xev as i on. 8 )Ar e gr e s s i v et axi sonet ha tt a x e shi ghi nc omei ndi vi dua l sa tl o we reffe c t i ver a t e s .Ex pl ai nwhyas al e s t a xl e vi e da tafla tr a t eof8pe r c e ntc a nber e gr e s s i ve . Ans we r :Whi l et hes al e st axr a t ei st hes amef oral li ndi vi dua l swi t houtr e gar dt ot he i ri nc omel e ve l ,l o we r i nc omei ndi vi dua l snor mal l ys pe ndahi ghe rpe r c e nt a geoft he i rt ot ali nc ome . Si nc et hes a l est a xi sl e vi e d ont heamount ss pe nt , t hi sme anst ha tt hes al e st axpai dbyl owe ri nc omei ndi vi dual sr e pr e s ent sal ar ge r per c e nt a geoft hei ri nc ome .Asac ons e que nc e ,t he yar ege ne r a l l yc ons i der e dt ober e gr e s s i vei nna t ur e . 9 )Di s t i ngui s hbe t we e nhor i z ont ale qui t yandve r t i c a le qui t ya st he s et e r msa r eus e di nde s c r i bi ngt a x s ys t ems . Ans we r :Hor i z ont ale qui t yi sac hi e ve dwhe nt ax pa ye r si ns i mi l a re c onomi cc i r c ums t a nc e sa r es ubj ec tt o s i mi l a rl e ve l soft ax a t i on.Ve r t i c a le qui t yi sac hi e ve dwhe nt ax pa ye r si ndi ffe r e nte c onomi cc i r c ums t a nc e s a r es ubj e c tt ot ax e si nadi ffe r entma nner . 1 0)Wha ta r es omeoft hef ac t or st ha tha vel e dt ot hee nt r e nc he dus eoft axe xpe ndi t ur e sasoppos edt o pr ogr am s pe ndi ng ? Ans we r :Ther e as onst ha ta r el i s t e di nt het e xtar easf o l l ows : •I ti sl e s sc os t l yt oadmi ni s t e rt a xe xpe ndi t ur e st ha ni ti st oa dmi ni s t e rgo ve r nme ntf undi ngpr ogr a ms . •Mor ede c i s i onsa r el e f tt ot hepr i va t es e c t ors ot ha tf undsma ybeal l oc a t e dmor ee ffic i e nt l y . •Taxe xpendi t ur e sr e duc et hevi s i bi l i t yofc e r t ai ngo ve r nme ntac t i ons . Thi si spa r t i c ul a r l ybene fic i ali f s omes oc i a ls t i gmai sa t t ac hedt ot hepr ogr a ms . Fore xa mpl e ,ac hi l dt a xbe ne fits ys t e mi smor ea c c e pt abl e t hani nc r e a s i ngs oc i ala s s i s t anc epa yment s . •Taxe xpendi t ur e sr e duc et hepr ogr e s s i vi t yoft het a xs ys t e m.Asmanyoft het axe xpe ndi t ur e s ,s uc has t a xs he l t er s , ar emor ea vai l a bl et ohi gheri nc omet a xpa ye r s ,t he ys e r vet or e duc ee ffec t i vet axr a t e si nt he hi ghe rr a t ebr ac ke t s .

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For Full Chapters : [email protected] 1 1)Whi l et heSe c t i onsoft heI nc o meTa xAc tar enumber ed1t hr ough2 60 ,t he r ear ea c t ual l ymor et ha n26 0 Se c t i ons . Expl ai nwhyt hi si st hec as e . Ans we r :Thi ss i t ua t i onr e fle c t st hef a c tt ha twhe nane w Se c t i oni sa dde d,i tha sbe e nmor ec onve ni e ntt o a t t a c hade c i malde s i gna t i ont ot hene w Se c t i on,a soppos e dt or enumbe r i nga l loft heSe c t i onst ha tf ol l ow t hene w Se c t i on.Asane xa mpl e ,o ve rs e ve r a lye a r s ,t heDe par t me ntofFi na nc ehasa dde ds i xne w Se c t i onsaf t e rSe c t i on12 .The yha vebe e nnumbe r e dSe c t i on12. 1t hr oughSe c t i on1 2. 6.I ft he yhadus ed whol enumbe r sf ort he s ene w Se c t i ons ,i twoul dha vebee nne c e s s a r yt or e numbe ra l loft her e mai ni ng Se c t i onsi nt heAc te ac ht i meane w Se c t i onwa sadde d. 1 2)Wha tpur pos esar es e r ve dbyCa na da' si nt e r na t i ona lt axt r e a t i es ? Ans we r :Thepur pos e soft he s et r e a t i e sa r easf ol l ows : •The yat t emptt oa voi ddoubl et ax a t i onoft a xpa ye r swhoma yha ver e a s ont opa yt ax e si nmor et ha none j ur i s di c t i on. •The yt r yt opr e ve nti nt e r na t i onale va s i onoft a xe s . 1 3)Li s tf ournonl e gi s l a t i ves our c e sofi nc omet a xi nf or ma t i on. Ans we r :Ther e qui r e df ouri t e msc anbes e l e c t e df r om t hef ol l owi ng: •CRAWe bSi t e •I nt e r pr et a t i onBul l e t i ns •I nc omeTaxFol i os •I nf or ma t i onCi r c ul ar s •I nc omeTaxTe c hni c alNe ws •CRANe wsRe l e as e s , Ta xTi ps ,a ndFa c tShe e t s •CRAGui de s •CRAPa mphl e t s •Advanc eI nc omeTa xRul i ngs •Te c hni c alI nt e r pr e t a t i ons 1 4)Wha ti st heme ani ngof" t a xa t i onye ar "ast hephr a s ei sus e di nt heI nc o meTa xAc t ? Ans we r :Fori ndi vi dual sandi nt e rvi vost r us t s ,t het ax a t i onye a ri se qua lt ot hec al e nda rye ar . I nc ont r a s t , c or por a t i onsc a nal wa ysus eafis c alpe r i od. Afis c a lpe r i odc a ne ndonanyda t e , wi t ht heonl yc ons t r a i nt be i ngt ha ti tc a nnote x c e ed53we e ksf orac or por a t i on.Wi t hr e s pe c tt ot es t ament a r yt r us t s , pr i ort o2 01 6, l i kec or por a t i ons , t he yc oul dal wa ysus eanonc al e nda rfis c alye ar .I n2 01 6ands ubs e que ntye a r s , t he i rus e ofnonc al e nda rfis c a lpe r i odsi ss i gni fic a nt l yr e s t r i c t e d( s e eChapt e r19) . 1 5)Unde rwha tc i r c ums t anc e swi l lape r s onwhoi snotr e s i de nti nCa na daber e qui r e dt opa yCana di an i nc omet a x e s ? Ans we r :Thec i r c ums t a nc e st ha twoul dr es ul ti nanonr e s i dentpe r s onha vi ngt opa yi nc omet a xe si n Ca na daa r ea sf ol l o ws : •Thenonr e s i dentpe r s one ar nse mpl oymenti nc omei nCanada . •Thenonr e s i dentpe r s onc ar r i e donabus i ne s si nCa na da . •Thenonr e s i dentpe r s onhasagai nont hedi s pos a lofat ax abl eCanadi anpr ope r t y .

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For Full Chapters : [email protected] 1 6)Wha ti st hei mpor t anc eofr e s i de nc ei nCanadi ani nc omet a xa t i on? Ans we r :Ass t a t e di nt het e xt , r e s i denc ei st hec or ne r s t oneofCana di a ni nc omet axa t i on. I fape r s oni s c ons i de r e dar e s i dentofCanadai nagi ve nye ar , t ha tper s onwi l lbes ubj e c tt oCa na di ani nc omet axf or t ha tye arona l ls our c e sofi nc ome .Al t e r na t i ve l y ,i ft hepe r s oni sanonr es i de nt , Canadi anPar tIt a xwi l l onl yappl yt oCanadi a nempl oyme nti nc ome , Canadi a nbus i ne s si nc ome ,a ndga i nsont hedi s pos i t i onof Ta xabl eCanadi a nPr ope r t y . 1 7)Whe nani ndi vi dua ll e a ve sCa na da ,t heCRAma yt a ket hepos i t i ont ha theha sr e t ai ne dhi sr e s i de nc e s t a t us . Wha tar et hepr i ma r yf a c t or st ha tt heCRAwi l lc ons i de ri nde t e r mi ni ngwhet he rs uc han i ndi vi dualha s , i nf a c t ,c e as e dt obeaCanadi a nr e s i de nt ? Ans we r :Ass t a t e di nS5 F1 C1, t hepr i mar yf a c t or st ha twi l lbec ons i der e dbyt heCRAa r easf ol l ows : •Whe t he rt hei ndi vi duali sc ont i nui ngt oma i nt a i nadwe l l i ngi nCanada . •Whe t he rt hes pous eorc ommonl a w par t ne roft hei ndi vi dua lr e mai nsi nCanada. •Whe t he rt hei ndi vi dualhasdepe ndant swhor e mai ni nCa na da. 1 8)Li s tt hr e ef a c t or st ha twoul dbec ons i de r e di nt hede t e r mi na t i onofwhet he rornotani ndi vi duali sa r e s i de ntofCana da . Ans we r :Thema i nf a c t or she r ewoul dbe : •Doe st hei ndi vi dualha veadwe l l i ngi nCa na da? •Doe st hei ndi vi dual ' ss pous eorc ommonl a w par t ne rl i vei nCa nada? •Dot hede pendant soft hei ndi vi dua ll i vei nCana da?Ot he rf ac t or st ha tc oul dbement i one di nc l ude : •Owni ngpe r s onalpr ope r t yi nCanada( s uc hasf ur ni t ur e ,c l ot hi ng,a ut omobi l e s ,andr ec r e a t i ona l ve hi c l es ) . •Soc i alt i eswi t hCa na da( s uc hasme mbe r s hi psi nCanadi anr e c r e a t i ona la ndr e l i gi ousor ga ni z a t i ons ) . •Ec onomi ct i e swi t hCanada( s uc ha sempl oymentwi t haCana di ane mpl oy eranda c t i vei nvol ve me nti n aCa na di a nbus i ne s s , andCa na di anbanka c c ount s ,r e t i r e me nts a vi ngspl ans , c r edi tc a r ds ,ands e c ur i t i es a c c ount s ) . •Hos pi t a l i za t i ona ndme di c ali ns ur anc ec ove r a gef r om apr ovi nc eort er r i t or yofCa na da . •Adr i ve r ' sl i c e ns ef r om apr ovi nc eort e r r i t or yofCa nada . •Ave hi c l er e gi s t e r e di napr ovi nc eort er r i t or yofCana da . •As e as ona ldwel l i ngpl ac ei nCanadaoral e a s e ddwe l l i ngpl a c e . •Hol di ngaCanadi anpa s s por t . •Me mbe r s hi pi nCanadi anuni onsorpr of e s s i onalor ga ni z a t i ons .

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For Full Chapters : [email protected] 1 9)I fani ndi vi duall ea ve sCanadaf orat e mpor ar yabs enc e ,t hi sr ai s est heque s t i onofwhet he rhewa sa Ca na di a nr e s i dentdur i ngt hepe r i odofabs e nc e , pa r t i c ul a r l yi fs omer es i de nt i a lt i e sha vebe enr e t ai ne d. Wha tar et hema j orf a c t or st ha tar ec ons i der edi ndet e r mi ni ngwhe t he rani ndi vi dualc ont i nue st obea Ca na di a nr e s i dentdur i ngat e mpor a r yabs e nc e ? Ans we r :Asnot edi nt het e xt , S5F1C1i de nt i fie st hef ol l owi ngf a c t or s : I nt e nt-Thei s s uehe r ei swhet he rt hei ndi vi duali nt e nde dt ope r ma ne nt l ys e ve rr es i de nt i alt i eswi t h Ca na da. I f , f ore xa mpl e , t hei ndi vi dua lhasac ont r a c tf ore mpl oyme nt , i fandwhenher e t ur nst oCanada , t hi sc oul dbevi e we dase vi de nc et ha thedi dnoti nt e ndt ope r ma ne nt l yde pa r t .Anot he rf a c t orwoul dbe whe t hert hei ndi vi dualc ompl i e dwi t ht her ul e sr e l a t e dt ope r mane ntde pa r t ur e s( i . e . ,a snot e di nChapt e r 8 ,t he r ei sade e me ddi s pos i t i onofani ndi vi dua l ' spr ope r t ya tt het i meofde pa r t ur ef r om Ca na da , r e s ul t i ngi nt henee dt opa yt a xe sona nygai ns ) . Fr equenc yOfVi s i t s-I ft hei ndi vi dua lc ont i nue st ovi s i tCa na daonar e gul ara ndc ont i nui ngbas i s , par t i c ul a r l yi fot he rs e c ondar yr e s i de nt i alt i e sa r epr e s e nt ,t hi swoul ds ugge s tt ha thedi dnoti nt e ndt o per mane nt l ydepar tf r om Canada . Re s i de nt i a lTi e sOut s i deOfCana da-Af ur t he rc ons i de r a t i oni swhe t herornott hei ndi vi dual e s t abl i s he sr e s i de nt i alt i e si na not he rc ount r y .I fs ome onel e a ve sCanadaa ndt r a ve l sf ora ne xt ens i ve per i odoft i mewi t houts et t l i ngi nanyonel oc a t i on, i twi l lbec ons i de r e dase vi de nc et ha thehasnot per mane nt l ydepar t e df r om Ca na da . 2 0)Oneofyourf r i e ndsi sl e a vi ngCanadaa ndwoul dl i ket oknow whenhewi l lnol onge rbec ons i der e da Ca na di a nr e s i dent . Br i e flye xpl ai nt her ul e sr e l a t e dt ot e r mi na t i ngani ndi vi dua l ' ss t a t usasaCa nadi a n r e s i de nt . Ans we r :ACa na di anr e s i de ntnor mal l ybe c omesanonr e s i de ntont hel a t e s toft hef ol l owi ngda ys : •onl e a vi ngCa nada , •whe nas pous ea nd/orde pe nda nt sl e a veCanada ,and •onbe c omi ngar e s i de ntofa not he rc ount r y . 2 1)Fort hec ur r e ntye ar , J aneDoei sde emedt oaCanadi a nr e s i dentbe c aus es hes oj our ne di nCanadaf or 2 10da ys .Al s of o rt hec ur r e ntye ar , J a c kFa wn,al ongt i mer e s i de ntofMa ni t oba , wa sc ons i der edapar t ye a rr e s i dentf ort hefir s t21 0da ys , af t e rwhi c hhepe r ma ne nt l yde pa r t e df r om Ca nada .Ex pl ai nhow t he s e t woi ndi vi dual swi l lbet a x e di nCanada . Ans we r :Asas oj our ne r , J a newoul dbea s s e s s edCanadi a ni nc omet a xe sonhe rwor l dwi dei nc omef ort he e nt i r eye ar .Ass hewoul dnotbec ons i de r edar es i de ntofapr ovi nc e ,s hewoul dbeas s es s e da naddi t i onal f e de r ali nc omet axof4 8pe r c e ntofhe rbas i cf e de r a lt a xot her wi s epa ya bl e . I nc ont r as t , J a c kwoul donl ybeas s e s s e dCanadi ani nc omet ax e sonhi swor l dwi dei nc omef ort he2 10da y per i odpr i ort ohi sde pa r t ur ef r om Canada .I naddi t i on, hewoul dbeas s es s e dpr ovi nc i ali nc omet axi n t hepr o vi nc eofMani t obaf ort hi s2 10da ype r i od.

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For Full Chapters : [email protected] 2 2)I ti spos s i bl et ha ta ni ndi vi dualc oul dbec ons i de r e dr e s i de nti nmor et hanonec ount r y .I ns uc h s i t ua t i ons ," t i e br e ake r "r ul e sar eus e dt oa voi dt hei ndi vi dua lbe i ngs ubj ec tt ot axa t i oni nbot hc ount r i e s . Li s ta ndde s c r i bet hr e ef a c t or st ha twoul dbec ons i de r e di ni mpl e ment i ngt het i e br e akerr ul es . Ans we r :Ther e qui r e dt hr eei t e msc oul dbes e l e c t e df r om t hef ol l owi ng: Per mane ntHome-I ft hei ndi vi dua lhasape r mane nthomea va i l abl ei nonl yonec ount r y ,t hei ndi vi dua l wi l lbec ons i de r e dar e s i de ntoft ha tc ount r y .Ape r ma ne nthomeme ansadwe l l i ng, r e nt e dorpur c ha s ed, t ha ti sc ont i nuous l ya vai l a bl ea ta l lt i me s .Fort hi spur pos e , ahomet ha twoul donl ybeus e df oras hor t dur at i onwoul dnotbec ons i de r e dape r mane nthome . Ce nt r eofVi t alI nt er es t s-I ft hei ndi vi dua lhaspe r ma ne nthome si nbot hc ount r i e s ,ori nne i t her , t he n t hi st e s tl ookst ot hec ount r yi nwhi c ht hei ndi vi dua l ' sper s onalande c onomi cr e l a t i onsar egr e a t e s t . Suc h r e l at i onsa r evi r t ual l yi de nt i c alt ot het i e st ha ta r ee x ami ne dwhe nde t e r mi ni ngf a c t ualr e s i de nc ef or i ndi vi dual s . Ha bi t ualAbode-I ft hefir s tt wot e s t sdonotyi e l dade t e r mi na t i on, t he nt hec ount r ywhe r et he i ndi vi duals pe ndsmor et i mewi l lbec ons i de r e dt hec ount r yofr e s i de nc e . Ci t i z ens hi p-I ft het i e br e ake rr ul e ss t i l lf a i lt or es ol vet hei s s ue , t he nt hei ndi vi dualwi l lbec ons i de r e da r e s i de ntoft hec ount r ywhe r et hei ndi vi dua li sac i t i z e n. Compe t entAut hor i t y-I fnoneoft hepr e c edi ngt e s t sr e s ol vet heque s t i onofr es i denc yt hen,asal as t r e s or t , t hes oc a l l e d" c ompet e nta ut hor i t ypr oc e dur e s "ar eus ed.Wi t houtde s c r i bi ngt hem i nde t a i l , t he s e pr oc e dur esar ea i meda tope ni ngadi a l oguebe t we ent het woc ount r i esf ort hepur pos eofr es ol vi ngt he c onfli c t . 2 3)Ar ee nt e r pr i s e st ha tar ei nc or por a t e di nCanadaa l wa ysc ons i de r e dt ober e s i de nti nCanada?Expl a i n y ourc onc l us i on. Ans we r :I fanent er pr i s ei si nc or por a t e di nCa na daaf t e rApr i l26 ,1 965 ,i twi l lal wa ysbec ons i de r e d r e s i de nti nCa na da . Howe ve r , i fi ti si nc or por a t e di nCa na dapr i ort oApr i l27 ,1 965 ,i twi l lonl ybe c ons i de r e dr e s i denti nCana dai nt hos es i t ua t i onswhe r ei te i t he r : •c a r r i e donbus i ne s si nCa nadaa tanyt i mea f t e rt ha tda t e ;or •wa sr e s i de nti nCa na daa ta nyt i meaf t e rt ha tda t e( asme as ur e dbyt hel oc a t i onoft hemi ndand mana gementoft hec or por a t i on) . 2 4)Li monI nc .wasi nc or por a t e di nt heU. S.fiveye ar sa go .Howe ve r , al loft hedi r e c t or soft hec or por a t i on a r eCanadi a nr e s i de nt s , hol di ngal loft hei rme e t i ngsi nMont r eal .How woul dLi monI nc .bet ax e d? Ans we r :Li monI nc .i saU. S.r e s i dentbe c aus ei twasi nc or por a t e di nt ha tc ount r y .I ti sal s oaCanadi a n r e s i de ntunde rt hemi nda ndmana ge me ntt e s t .I ns uc hdualr e s i de nc yc as e s , t het i ebr e ake rr ul ei nt he Ca na da/U. S.t a xt r e at yi ndi c a t e st ha tt het a xe swi l lbeas s e s s e di nt hec ount r yofi nc or por a t i on.Tha t me a nst ha tLi monI nc . woul dbes ubj e c tt oU. S. i nc omet a x e s .

6 For Full Chapters : [email protected]

For Full Chapters : [email protected] 2 5)Wha ta r et hec ompone nt sofNe tI nc omeForTa xPur pos e s ? Ans we r :Thec ompone nt sofNe tI nc omeForTa xPur pos e sar ee mpl oyme nti nc ome ,bus i ne s sa nd pr ope r t yi nc ome , ne tt a xabl ec a pi t a lga i ns ,ot he rs our c e sofi nc ome ,a ndot he rde duc t i onsf r om i nc ome . 2 6)I TA3 ( b)s t a t e st ha tat a xpa ye rs houl d" de t e r mi net heamount , i fa ny" , bywhi c ht a xabl ec a pi t a lgai ns e x c e e dsal l owa bl ec api t a ll os s es .I nt hi sc ont e xt ,wha ti st heme ani ngoft hephr as e" t heamount ,i fany" ? Ans we r :Thephr as e" t heamount , i fa ny"i sus e dt hr oughoutt heI nc o meTa xAc tt oi ndi c a t et ha tonl y pos i t i veamount ss houl dbec ons i der ed.I nt hec ont e xtofI TA3( b) , t her e qui r eme ntt ha tne ga t i veamount s bei gnor ed,i ne ffe c t , pr e ve nt st hede duc t i onofc ur r entye aral l o wabl ec api t all os s e si ne x c e s sofc ur r e nt ye a rt ax abl ec api t a lga i nsi nt hede t e r mi...