Solution Manual for Canadian Income Taxation 2022/2023 (25th Edition) – William Buckwold, Joan Kitunen, Matthew Roman – Complete Solutions (Chapters 1–23)

SOLUTION MANUAL
Canadian Income Taxation 26th Edition
by William Buckwold, All Chapters 1 - 23

,TABLE OF CONTENTS ASD ASD




Chapter1 Taxation-Its Role in Decision Making
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Chapter2 Fundamentals of Tax Planning
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Chapter 3 Liability for Tax, Income Determination, and Administration of the Income Tax System
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Chapter 4 Income from Employment
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Chapter 5 Income from Business
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Chapter 6 The Acquisition, Use, and Disposal of Depreciable Property
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Chapter7 Income from Property
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Chapter8 Gains and Losses on the Disposition of Capital Property-Capital Gains
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Chapter 9 Other Income, Other Deductions, and Special Rules for Completing Net Income for Tax Purposes
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Chapter 10 Individuals: Determination of Taxable Income and Taxes Payable
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Chapter 11 Corporations-An Introduction
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Chapter 12 Organization, Capital Structures, and Income Distributions of Corporations
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Chapter 13 The Canadian-Controlled Private Corporation
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Chapter 14 Multiple Corporations and Their Reorganization
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Chapter 15 Partnerships
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Chapter 16 Limited Partnerships and Joint Ventures
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Chapter 17 Trusts
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Chapter 18 Business Acquisitions and Divestitures-Assets versus Shares
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Chapter 19 Business Acquisitions and Divestitures-Tax-Deferred Sales
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Chapter 20 Domestic and International Business Expansion
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Chapter 21 Tax Aspects of Corporate Financing
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Chapter 22 Introduction to GST/HST
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Chapter 23 Business Valuations
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, CHAPTER 1 ASD




TAXATION― ITS ROLE IN BUSINESS DECISION MAKING ASD ASD ASD ASD ASD ASD




Review Questions ASD




1. If income tax is imposed after profits have been determined, why is taxation relevant to business decisi
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on making? ASD




2. Most business decisions involve the evaluation of alternative courses of action. For example, a market
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ing manager may be responsible for choosing a strategy for establishing sales in new geographical terr
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itories. Briefly explain how the tax factor can be an integral part of this decision. ASD ASD ASD ASD ASD ASD ASD ASD A SD A SD A SD A SD A SD ASD




3. What are the fundamental variables of the income tax system that decision-ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD




makers should be familiar with so that they can apply tax issues to their areas of responsibility? ASD ASD ASD A SD ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD




4. What is an ―after-tax‖ approach to decision making? A SD A SD ASD A SD ASD A SD ASD




Solutions to Review Questions
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R1-
1 Once profit is determined, the Income Tax Act determines the amount of income tax that results. Howe
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ver, at all levels of management, alternative courses of action are evaluated.In many cases, the choice of
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one alternative over the other may affect both the amount and the timing of future taxes on income gener
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ated from that activity. Therefore, the person making those decisions has a direct input into future after-
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tax cash flow. Obviously, decisions that reduce or postpone the payment of tax affect the ultimate retu
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rn on investment and, in turn, the value of the enterprise. Including the tax variable as a part of the formal
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decision process will ultimately lead to improved after-tax cash flow. A SD A SD ASD ASD A SD ASD A SD ASD ASD




R1-
2 Expansion can be achieved in new geographic areas through direct selling, or by establishing a formal
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presence in the new territory with a branch office or a separate corporation. The new territories may also
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cross provincial or international boundaries. Provincial income tax rates vary amongst the provinces. T
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he amount of income that is subject to tax in the new province will be different for each of the three altern
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atives mentioned above. For example, with direct selling, none of the income is taxed in the new provinc
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e, but with a separate corporation, all of the income is taxed in the new province. Because the tax cost is d
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ifferent in each case, taxation is a relevant part of the decision and must be included in any cost-
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benefit analysis that compares the three alternatives [Reg. 400-402.1].
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R1-
3 A basic understanding of the following variables will significantly strengthen a decision maker's abilit
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y to apply tax issues to their area of responsibility.
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Types of Income ASD A SD - Employment, Business, Property, Capital gains ASD ASD ASD ASD




Taxable Entities ASD - Individuals, Corporations, Trusts ASD ASD




Alternative Business ASD - Corporation, Proprietorship, Partnership, Limited ASD ASD ASD

, Structures partnership, Joint arrangement, Income trust ASD ASD ASD ASD




Tax Jurisdictions ASD - Federal, Provincial, Foreign ASD ASD




R1-
4 All cash flow decisions, whether related to revenues, expenses, asset acquisitions or divestitures, or de
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bt and equity restructuring, will impact the amount and timing of the tax cost. Therefore, cash flow exis
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ts only on an after tax basis, and, the tax impacts whetheror not the ultimate result of the decision is s
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uccessful. An after-tax approach to decision-making requires each decision-maker to think "after-
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tax" for every decision at thetime the decision is being made, and, to consider alternative courses of actio
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n to minimizethe tax cost, in the same way that decisions are made regarding other types of costs.
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Failure to apply an after- A S D A S D A S D A S D




tax approach at the time that decisions are made may provideinaccurate information for evaluation, and, r
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esult in a permanently inefficient tax structure.
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CHAPTER 2 ASD




FUNDAMENTALS OF TAX PLANNING ASD ASD ASD




Review Questions ASD




1. ―Taxplanning andtax avoidance mean thesame thing.‖ Is this statement true? Explain. ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD




2. What distinguishes tax evasion from tax avoidance and tax planning? ASD ASD ASD A SD ASD ASD ASD ASD ASD




3. Does Canada Revenue Agency deal with all tax avoidance activities in the same way? Explain.
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4. The purpose of tax planning is to reduce or defer the tax costs associated with financial transactions. W
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hat are the general types of tax planning activities? Briefly explain how each of them may reduce or def
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er the tax cost. A SD ASD ASD




5. ―It is always better to pay tax later rather than sooner.‖ Is this statement true? Explain.
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6. When corporate tax rates are 13% and tax rates for individuals are 40%, is it always better for the indivi
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dual to transfer their business to a corporation?
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7. ―As long as all of the income tax rules are known, a tax plan can be developed with certainty.‖ Is this st
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atement true? Explain. A SD ASD




8. What basic skills are required to develop a good tax plan? ASD ASD ASD ASD ASD ASD ASD ASD ASD ASD




9. An entrepreneur is developing a new business venture and is planning to raise equity capital from indiv
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idual investors. Their adviser indicates that the venture could be structured as a corporation (i.e., share
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s are issued to the investors) or as a limited partnership (i.e., partnership units are sold). Both stru
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ctures provide limited liability forthe investors. Should the entrepreneur consider the tax positions
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of the individual investors? Explain. Without dealing with specific tax rules, what general tax factors s
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hould an investor consider before making an investment? ASD A SD A SD A SD ASD A SD A SD