P
Instructor PSolutions PManual PChapter
P POne
,P Buckwold, PKitunen, PRoman Pand PIqbal, PCanadian PIncome PTaxation, P2022-
2023 PEd.
P
Solution Manual for Canadian Income Taxation
26th Editionby William Buckwold, Joan
Kitunen, Matthew Roman-latest-2023- 2024
CHAPTER P1
TAXATION― PITS PROLE PIN PBUSINESS PDECISION PMAKING
Review PQuestions
1. If Pincome Ptax Pis Pimposed Pafter Pprofits Phave Pbeen Pdetermined, Pwhy Pis Ptaxation
Prelevant Pto Pbusiness Pdecision Pmaking? P
2. Most Pbusiness Pdecisions Pinvolve Pthe Pevaluation Pof Palternative Pcourses Pof Paction.
PFor Pexample, Pa Pmarketing Pmanager Pmay Pbe Presponsible Pfor Pchoosing Pa
Pstrategy Pfor Pestablishing P sales P in P new P geographical P territories. P Briefly P explain
P how P the P tax P factor P can Pbe Pan Pintegral Ppart Pof Pthis Pdecision. P
3. What Pare Pthe Pfundamental Pvariables Pof Pthe Pincome Ptax Psystem Pthat P decision-
makers Pshould Pbe Pfamiliar Pwith Pso Pthat Pthey Pcan Papply Ptax Pissues Pto Ptheir Pareas
Pof Presponsibility? P
4. What Pis Pan P―after-tax‖ Papproach Pto Pdecision Pmaking? P
Instructor PSolutions PManual PChapter
P POne
,P
1
Instructor PSolutions PManual PChapter
P POne
, P Buckwold, PKitunen, PRoman Pand PIqbal, PCanadian PIncome PTaxation, P2022-
2023 PEd.
P
Solutions Pto PReview PQuestions
R1-1 POnce Pprofit Pis Pdetermined, Pthe PIncome PTax PAct Pdetermines Pthe Pamount Pof
Pincome Ptax Pthat Presults. PHowever, Pat Pall Plevels Pof Pmanagement, Palternative
Pcourses Pof Paction Pare Pevaluated. PIn P many P cases, P the P choice P of P one
P alternative P over P the P other P may P affect P both P the P amount Pand P the P timing P of
P future P taxes P on P income P generated P from P that P activity. P Therefore, P the
Pperson Pmaking Pthose Pdecisions Phas Pa Pdirect Pinput Pinto Pfuture Pafter-tax P cash
P flow. PObviously, Pdecisions Pthat Preduce Por Ppostpone Pthe Ppayment Pof Ptax Paffect
Pthe Pultimate Preturn Pon P investment P and, P in P turn, Pthe P value P of P the P enterprise.
P Including P the P tax Pvariable P as P a P part Pof Pthe Pformal Pdecision Pprocess Pwill
Pultimately Plead Pto Pimproved Pafter-tax Pcash Pflow. P
R1-2 PExpansion Pcan Pbe Pachieved Pin Pnew Pgeographic Pareas Pthrough Pdirect Pselling, Por
Pby Pestablishing Pa Pformal Ppresence Pin Pthe Pnew Pterritory Pwith Pa Pbranch Poffice Por
Pa Pseparate Pcorporation. PThe Pnew Pterritories Pmay Palso Pcross Pprovincial Por
Pinternational Pboundaries. PProvincial Pincome Ptax Prates Pvary Pamongst Pthe Pprovinces.
PThe Pamount Pof Pincome Pthat Pis Psubject Pto Ptax Pin Pthe Pnew Pprovince Pwill Pbe
Pdifferent Pfor Peach Pof Pthe Pthree Palternatives Pmentioned Pabove. PFor Pexample, Pwith
Pdirect Pselling, Pnone Pof Pthe Pincome Pis Ptaxed Pin Pthe Pnew Pprovince, Pbut Pwith Pa
Pseparate Pcorporation, Pall Pof Pthe Pincome Pis Ptaxed Pin Pthe Pnew Pprovince. PBecause
Pthe Ptax Pcost Pis Pdifferent Pin Peach Pcase, Ptaxation Pis Pa Prelevant Ppart Pof P the
Pdecision Pand Pmust Pbe Pincluded Pin Pany Pcost-benefit Panalysis Pthat Pcompares Pthe
Pthree Palternatives P[Reg. P400-402.1]. P
R1-3 PA Pbasic Punderstanding Pof Pthe Pfollowing Pvariables Pwill Psignificantly Pstrengthen Pa
Pdecision Pmaker's Pability Pto Papply Ptax Pissues Pto Ptheir Parea Pof Presponsibility. P
Types Pof PIncome P - P Employment, PBusiness, PProperty, PCapital Pgains
P
Taxable PEntities P - P Individuals, PCorporations, PTrusts P
Alternative PBusiness P - P Corporation, PProprietorship, PPartnership, PLimited
P
Structures P partnership, PJoint Parrangement, PIncome Ptrust P
Tax PJurisdictions P - P Federal, PProvincial, PForeign P
R1-4 PAll Pcash Pflow Pdecisions, Pwhether Prelated Pto Prevenues, Pexpenses, Passet
Pacquisitions Por Pdivestitures, Por Pdebt Pand Pequity Prestructuring, Pwill Pimpact Pthe
Pamount Pand Ptiming Pof Pthe Ptax Pcost. P Therefore, P cash P flow P exists P only P on P an
P after P tax P basis, P and, P the P tax P impacts P whether Por Pnot Pthe Pultimate Presult Pof
Pthe Pdecision Pis Psuccessful. PAn Pafter-tax Papproach Pto Pdecision- Pmaking Prequires
Peach Pdecision-maker Pto Pthink P"after-tax" Pfor Pevery Pdecision Pat Pthe Ptime Pthe
Pdecision Pis Pbeing Pmade, Pand, Pto Pconsider Palternative Pcourses Pof Paction Pto
Pminimize Pthe Ptax Pcost, Pin Pthe Psame Pway Pthat Pdecisions Pare Pmade Pregarding
Pother Ptypes Pof Pcosts. P
Failure P to P apply P an P after-tax P approach P at P the P time P that P decisions P are P made
P may P provide Pinaccurate Pinformation Pfor Pevaluation, Pand, Presult Pin Pa Ppermanently
Pinefficient Ptax Pstructure. P
Instructor PSolutions PManual PChapter
P POne
Instructor PSolutions PManual PChapter
P POne
,P Buckwold, PKitunen, PRoman Pand PIqbal, PCanadian PIncome PTaxation, P2022-
2023 PEd.
P
Solution Manual for Canadian Income Taxation
26th Editionby William Buckwold, Joan
Kitunen, Matthew Roman-latest-2023- 2024
CHAPTER P1
TAXATION― PITS PROLE PIN PBUSINESS PDECISION PMAKING
Review PQuestions
1. If Pincome Ptax Pis Pimposed Pafter Pprofits Phave Pbeen Pdetermined, Pwhy Pis Ptaxation
Prelevant Pto Pbusiness Pdecision Pmaking? P
2. Most Pbusiness Pdecisions Pinvolve Pthe Pevaluation Pof Palternative Pcourses Pof Paction.
PFor Pexample, Pa Pmarketing Pmanager Pmay Pbe Presponsible Pfor Pchoosing Pa
Pstrategy Pfor Pestablishing P sales P in P new P geographical P territories. P Briefly P explain
P how P the P tax P factor P can Pbe Pan Pintegral Ppart Pof Pthis Pdecision. P
3. What Pare Pthe Pfundamental Pvariables Pof Pthe Pincome Ptax Psystem Pthat P decision-
makers Pshould Pbe Pfamiliar Pwith Pso Pthat Pthey Pcan Papply Ptax Pissues Pto Ptheir Pareas
Pof Presponsibility? P
4. What Pis Pan P―after-tax‖ Papproach Pto Pdecision Pmaking? P
Instructor PSolutions PManual PChapter
P POne
,P
1
Instructor PSolutions PManual PChapter
P POne
, P Buckwold, PKitunen, PRoman Pand PIqbal, PCanadian PIncome PTaxation, P2022-
2023 PEd.
P
Solutions Pto PReview PQuestions
R1-1 POnce Pprofit Pis Pdetermined, Pthe PIncome PTax PAct Pdetermines Pthe Pamount Pof
Pincome Ptax Pthat Presults. PHowever, Pat Pall Plevels Pof Pmanagement, Palternative
Pcourses Pof Paction Pare Pevaluated. PIn P many P cases, P the P choice P of P one
P alternative P over P the P other P may P affect P both P the P amount Pand P the P timing P of
P future P taxes P on P income P generated P from P that P activity. P Therefore, P the
Pperson Pmaking Pthose Pdecisions Phas Pa Pdirect Pinput Pinto Pfuture Pafter-tax P cash
P flow. PObviously, Pdecisions Pthat Preduce Por Ppostpone Pthe Ppayment Pof Ptax Paffect
Pthe Pultimate Preturn Pon P investment P and, P in P turn, Pthe P value P of P the P enterprise.
P Including P the P tax Pvariable P as P a P part Pof Pthe Pformal Pdecision Pprocess Pwill
Pultimately Plead Pto Pimproved Pafter-tax Pcash Pflow. P
R1-2 PExpansion Pcan Pbe Pachieved Pin Pnew Pgeographic Pareas Pthrough Pdirect Pselling, Por
Pby Pestablishing Pa Pformal Ppresence Pin Pthe Pnew Pterritory Pwith Pa Pbranch Poffice Por
Pa Pseparate Pcorporation. PThe Pnew Pterritories Pmay Palso Pcross Pprovincial Por
Pinternational Pboundaries. PProvincial Pincome Ptax Prates Pvary Pamongst Pthe Pprovinces.
PThe Pamount Pof Pincome Pthat Pis Psubject Pto Ptax Pin Pthe Pnew Pprovince Pwill Pbe
Pdifferent Pfor Peach Pof Pthe Pthree Palternatives Pmentioned Pabove. PFor Pexample, Pwith
Pdirect Pselling, Pnone Pof Pthe Pincome Pis Ptaxed Pin Pthe Pnew Pprovince, Pbut Pwith Pa
Pseparate Pcorporation, Pall Pof Pthe Pincome Pis Ptaxed Pin Pthe Pnew Pprovince. PBecause
Pthe Ptax Pcost Pis Pdifferent Pin Peach Pcase, Ptaxation Pis Pa Prelevant Ppart Pof P the
Pdecision Pand Pmust Pbe Pincluded Pin Pany Pcost-benefit Panalysis Pthat Pcompares Pthe
Pthree Palternatives P[Reg. P400-402.1]. P
R1-3 PA Pbasic Punderstanding Pof Pthe Pfollowing Pvariables Pwill Psignificantly Pstrengthen Pa
Pdecision Pmaker's Pability Pto Papply Ptax Pissues Pto Ptheir Parea Pof Presponsibility. P
Types Pof PIncome P - P Employment, PBusiness, PProperty, PCapital Pgains
P
Taxable PEntities P - P Individuals, PCorporations, PTrusts P
Alternative PBusiness P - P Corporation, PProprietorship, PPartnership, PLimited
P
Structures P partnership, PJoint Parrangement, PIncome Ptrust P
Tax PJurisdictions P - P Federal, PProvincial, PForeign P
R1-4 PAll Pcash Pflow Pdecisions, Pwhether Prelated Pto Prevenues, Pexpenses, Passet
Pacquisitions Por Pdivestitures, Por Pdebt Pand Pequity Prestructuring, Pwill Pimpact Pthe
Pamount Pand Ptiming Pof Pthe Ptax Pcost. P Therefore, P cash P flow P exists P only P on P an
P after P tax P basis, P and, P the P tax P impacts P whether Por Pnot Pthe Pultimate Presult Pof
Pthe Pdecision Pis Psuccessful. PAn Pafter-tax Papproach Pto Pdecision- Pmaking Prequires
Peach Pdecision-maker Pto Pthink P"after-tax" Pfor Pevery Pdecision Pat Pthe Ptime Pthe
Pdecision Pis Pbeing Pmade, Pand, Pto Pconsider Palternative Pcourses Pof Paction Pto
Pminimize Pthe Ptax Pcost, Pin Pthe Psame Pway Pthat Pdecisions Pare Pmade Pregarding
Pother Ptypes Pof Pcosts. P
Failure P to P apply P an P after-tax P approach P at P the P time P that P decisions P are P made
P may P provide Pinaccurate Pinformation Pfor Pevaluation, Pand, Presult Pin Pa Ppermanently
Pinefficient Ptax Pstructure. P
Instructor PSolutions PManual PChapter
P POne
