Question
In: Accounting
Mr. Dawson is considering incorporating a company and transferring some of his assets into this company...
Mr. Dawson is considering incorporating a company and transferring some of his assets into this company in order to take advantage of the possibility of some tax savings and deferral possibilities. Which of the following situations would provide the largest tax savings for Mr. Dawson?
| A. |
Incorporating a CCPC earning only Active Business Income eligible for the small business deduction. |
|
| B. |
Incorporating a CCPC earning only dividend income. |
|
| C. |
Incorporating a CCPC earning only investment income. |
|
| D. |
Incorporating a CCPC earning a 50/50 combination of Active Business Income eligible for the small business deduction and investment income. |
Solutions
Expert Solution
Answer:
Option A: Incorporating a CCPC earning only Active Business Income eligible for the small business deduction.
Explanation:
Option A is correct because Incorporating a CCPC earning only Active Business Income eligible for the small business deduction will provide the largest tax savings for Mr. Dawson.
Option B is incorrect because it Incorporating a CCPC earning only dividend income into this company in order to take advantage of the possibility of some tax savings and deferral possibilities is not good option as Option A.
Option C is incorrect because Incorporating a CCPC earning only investment income into this company in order to take advantage of the possibility of some tax savings and deferral possibilities is not good option as Option A.
Option D is incorrect because Incorporating a CCPC earning a 50/50 combination of Active Business Income eligible for the small business deduction and investment income is not as good tax savings as Option A.
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