SOLUTION MANUAL Canadian Income Taxation 26th Edition by William Buckwold, All Chapters (1 - 23) / Complete Guide A+

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

,TABLE OF CONTENTS
D D




Chapter1DTaxation-ItsDRoleDinDDecisionDMaking

Chapter2DFundamentalsDofDTaxDPlanning

ChapterD3DLiabilityDforDTax,DIncomeDDetermination,DandDAdministrationDofDtheDIncomeDTaxDSystem

ChapterD4DIncomeDfromDEmployment

ChapterD5DIncomeDfromDBusiness

ChapterD6DTheDAcquisition,DUse,DandDDisposalDofDDepreciableDProperty

Chapter7DIncomeDfromDProperty

Chapter8DGainsDandDLossesDonDtheDDispositionDofDCapitalDProperty-CapitalDGains

ChapterD9DOtherDIncome,DOtherDDeductions,DandDSpecialDRulesDforDCompletingDNetDIncomeDforDTaxDPurposes

ChapterD10DIndividuals:DDeterminationDofDTaxableDIncomeDandDTaxesDPayable

ChapterD11DCorporations-AnDIntroduction

ChapterD12DOrganization,DCapitalDStructures,DandDIncomeDDistributionsDofDCorporations

ChapterD13DTheDCanadian-ControlledDPrivateDCorporation

ChapterD14DMultipleDCorporationsDandDTheirDReorganization

ChapterD15DPartnerships

ChapterD16DLimitedDPartnershipsDandDJointDVentures

ChapterD17DTrusts

ChapterD18DBusinessDAcquisitionsDandDDivestitures-AssetsDversusDShares

ChapterD19DBusinessDAcquisitionsDandDDivestitures-Tax-DeferredDSales

ChapterD20DDomesticDandDInternationalDBusinessDExpansion

ChapterD21DTaxDAspectsDofDCorporateDFinancing

ChapterD22DIntroductionDtoDGST/HST

ChapterD23DBusinessDValuations

, CHAPTERD1

TAXATION―DITSDROLEDINDBUSINESSDDECISIONDMAKING

ReviewDQuestions

1. IfDincomeDtaxDisDimposedDafterDprofitsDhaveDbeenDdetermined,DwhyDisDtaxationDrelevantDtoDbusinessDd
ecisionDmaking?

2. MostDbusinessDdecisionsDinvolveDtheDevaluationDofDalternativeDcoursesDofDaction.DForDexample,DaDma
rketingDmanagerDmayDbeDresponsibleDforDchoosingDaDstrategyDforDestablishingDsalesDinDnewDgeograp
hicalDterritories.DBrieflyDexplainDhowDtheDtaxDfactorDcanDbeDanDintegralDpartDofDthisDdecision.

3. WhatDareDtheDfundamentalDvariablesDofDtheDincomeDtaxDsystemDthatDdecision-
makersDshouldDbeDfamiliarDwithDsoDthatDtheyDcanDapplyDtaxDissuesDtoDtheirDareasDofDresponsibility?

4. WhatDisDanD―after-tax‖DapproachDtoDdecisionDmaking?

SolutionsDtoDReviewDQuestions

R1-
1DOnceDprofitDisDdetermined,DtheDIncomeDTaxDActDdeterminesDtheDamountDofDincomeDtaxDthatDresults.D
However,DatDallDlevelsDofDmanagement,DalternativeDcoursesDofDactionDareDevaluated.DInDmanyDcases,Dth
eDchoiceDofDoneDalternativeDoverDtheDotherDmayDaffectDbothDtheDamountDandDtheDtimingDofDfutureDtaxesD
onDincomeDgeneratedDfromDthatDactivity.DTherefore,DtheDpersonDmakingDthoseDdecisionsDhasDaDdirectDi
nputDintoDfutureDafter-
taxDcashD flow.DObviously,DdecisionsDthatDreduceDorDpostponeDtheDpaymentDofDtaxDaffectDtheDultimateDr
eturnDonDinvestmentDand,DinDturn,DtheDvalueDofDtheDenterprise.DIncludingDtheDtaxDvariableDasDaDpartDofDt
heDformalDdecisionDprocessDwillDultimatelyDleadDtoDimprovedDafter-taxDcashDflow.

R1-
2DExpansionDcanDbeDachievedDinDnewDgeographicDareasDthroughDdirectDselling,DorDbyDestablishingDaDfo
rmalDpresenceDinDtheDnewDterritoryDwithDaDbranchDofficeDorDaDseparateDcorporation.DTheDnewDterritorie
sDmayDalsoDcrossDprovincialDorDinternationalDboundaries.DProvincialDincomeDtaxDratesDvaryDamongstDth
eDprovinces.DTheDamountDofDincomeDthatDisDsubjectDtoDtaxDinDtheDnewDprovinceDwillDbeDdifferentDforDea
chDofDtheDthreeDalternativesDmentionedDabove.DForDexample,DwithDdirectDselling,DnoneDofDtheDincomeDi
sDtaxedDinDtheDnewDprovince,DbutDwithDaDseparateDcorporation,DallDofDtheDincomeDisDtaxedDinDtheDnewDpr
ovince.DBecauseDtheDtaxDcostDisDdifferentDinDeachDcase,DtaxationDisDaDrelevantDpartDofDtheDdecisionDandD
mustDbeDincludedDinDanyDcost-benefitDanalysisDthatDcomparesDtheDthreeDalternativesD[Reg.D400-402.1].

R1-
3DADbasicDunderstandingDofDtheDfollowingDvariablesDwillDsignificantlyDstrengthenDaDdecisionDmaker'sD
abilityDtoDapplyDtaxDissuesDtoDtheirDareaDofDresponsibility.

TypesDofDIncome - Employment,DBusiness,DProperty,DCapitalDgains

TaxableDEntities - Individuals,DCorporations,DTrusts

AlternativeDBusiness - Corporation,DProprietorship,DPartnership,DLimited

, Structures partnership,DJointDarrangement,DIncomeDtrust

TaxDJurisdictions - Federal,DProvincial,DForeign

R1-
4DAllDcashDflowDdecisions,DwhetherDrelatedDtoDrevenues,Dexpenses,DassetDacquisitionsDorDdivestitures,D
orDdebtDandDequityDrestructuring,DwillDimpactDtheDamountDandDtimingDofDtheDtaxDcost.D Therefore,D cashD
flowD existsD onlyD onD anD afterD taxD basis,D and,D theD taxD impactsD whetherDorDnotDtheDultimateDresultDofDtheD
decisionDisDsuccessful.DAnDafter-taxDapproachDtoDdecision-makingDrequiresDeachDdecision-
makerDtoDthinkD"after-
tax"DforDeveryDdecisionDatDtheDtimeDtheDdecisionDisDbeingDmade,Dand,DtoDconsiderDalternativeDcoursesDof
DactionDtoDminimizeDtheDtaxDcost,DinDtheDsameDwayDthatDdecisionsDareDmadeDregardingDotherDtypesDofDco

sts.

FailureD toD applyD anD after-
taxD approachD atD theD timeD thatD decisionsD areD madeD mayD provideDinaccurateDinformationDforDevaluation,Dand,Dres
ultDinDaDpermanentlyDinefficientDtaxDstructure.




CHAPTERD2

FUNDAMENTALSDOFDTAXDPLANNING

ReviewDQuestions

1. ―TaxDplanningDandDtaxDavoidanceDmeanDtheDsameDthing.‖DIsDthisDstatementDtrue?DExplain.

2. WhatDdistinguishesDtaxDevasionDfromDtaxDavoidanceDandDtaxDplanning?

3. DoesDCanadaDRevenueDAgencyDdealDwithDallDtaxDavoidanceDactivitiesDinDtheDsameDway?DExplain.

4. TheDpurposeDofDtaxDplanningDisDtoDreduceDorDdeferDtheDtaxDcostsDassociatedDwithDfinancialDtransactio
ns.DWhatDareDtheDgeneralDtypesDofDtaxDplanningDactivities?DBrieflyDexplainDhowDeachDofDthemDmayDre
duceDorDdeferDtheDtaxDcost.

5. ―ItDisDalwaysDbetterDtoDpayDtaxDlaterDratherDthanDsooner.‖DIsDthisDstatementDtrue?DExplain.

6. WhenDcorporateDtaxDratesDareD13%DandDtaxDratesDforDindividualsDareD40%,DisDitDalwaysDbetterDforDtheD
individualDtoDtransferDtheirDbusinessDtoDaDcorporation?

7. ―AsDlongDasDallDofDtheDincomeDtaxDrulesDareDknown,DaDtaxDplanDcanDbeDdevelopedDwithDcertainty.‖DIsD
thisDstatementDtrue?DExplain.

8. WhatDbasicDskillsDareDrequiredDtoDdevelopDaDgoodDtaxDplan?
9. AnDentrepreneurDisDdevelopingDaDnewDbusinessDventureDandDisDplanningDtoDraiseDequityDcapitalDfromD
individualDinvestors.DTheirDadviserDindicatesDthatDtheDventureDcouldDbeDstructuredDasDaDcorporationD(i
.e.,DsharesDareDissuedDtoDtheDinvestors)DorDasDaDlimitedDpartnershipD (i.e.,D partnershipD unitsD areD sold).
D BothD structuresD provideD limitedD liabilityD forDtheDinvestors.DShouldDtheDentrepreneurDconsiderDtheDt

axDpositionsDofDtheDindividualDinvestors?DExplain.DWithoutDdealingDwithDspecificDtaxDrules,DwhatDge