For each Case, calculate Emerson's Net Income for Tax Purposes. Indicate the amount and type of any loss carry overs that would be available at the end of the current year, or state that no carry overs are available.

The following four Cases make different assumptions with respect to the amounts of income and deductions available to Mr. Emerson Comfort for the current taxation year:

Case 1: During the year, Emerson has net employment income of $123,480, interest income of $4,622, and taxable capital gains of $24,246. He has allowable capital losses of $4,835. He has deductible child care costs of $9,372.

Case 2: During the year, Emerson has net business income of $72,438 and a net rental loss of $9,846. His taxable capital gains for the year total $4,233, while his allowable capital losses for the year are $7,489. Because of his very high Earned Income in the previous year, he is able to make $22,000 deductible RRSP contribution.

Case 3: During the year, Emerson has net employment income of $47,234 and a net business loss of $68,672. Capital gains for the year total $12,472 while capital losses are realized in the amount of $9,332. He has deductible child care costs of $3,922.

Case 4: During the year, Emerson has interest income of $6,250, net business income of $43,962, and capital gains of $12,376. He also has a net rental loss of $72,460 and capital losses of $23,874. As he moved to a new work location during the year, he has deductible moving expenses of $7,387.

Required: For each Case, calculate Emerson's Net Income for Tax Purposes. Indicate the amount and type of any loss carry overs that would be available at the end of the current year, or state that no carry overs are available.

Expert Solution

CASE-1
	Net Employment Income		123480
	Add: Interest Income		4622
	Add: Capital Gain		24246
	Less: Capital Loss		-4835
	Less: Deductable Child care cost	-9372
	Net Taxable income		138141

CASE-2

	NET business income	72438
	Less-loss on house property	-9846	62592

	capital gain		4233
	set off of capital gain	-4233	0

	C/f to next year		3256
	Less; deduction rrsp contribution	-22000
	Net Taxable income		40592

CASE-3
	Net Employment Income		47234

	capital gain		12472
	set off capital los		-9332
				3140

	business loss		-68672
	set off from capital gain	3140
	loss to be carry forward	-65532

	Less: Deductable Child care cost	-3922

	Net Taxable income		43312

CASE-4
	Business income				43962
	Add: Interest Income				6250
	Less; rental loss				-72460	0

	Carry farword of rental loss				-22248

	Add: Capital Gain				12376
	Less: Capital Loss				-23874
	Carry farword of capital loss				-11498	0

	Less: Deductable Child care cost					-7387
	Net Taxable income					0

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