CONCEPTS IN FED.TAX.,2020-W/ACCESS
20th Edition
ISBN: 9780357110362
Author: Murphy
Publisher: CENGAGE L
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The audited accounts of Lindsay Co. for year-end August 31, 2014 show a profit of
$3,115,000 after charging the following:
Depreciation 430,000
Rent 175,000
Legal fees 1,350,000
Audit fees 88,000
Donations 119,000
Bad debts 242,000
Foreign Travel 395,750
Interest payments 62,375
Other Information:
a. Legal fees are as follows:
Expenses in respect of recovery of debts, $585,000
Expenses related to the increase private share capital, $765,000
b. Lindsay Co. donated $65,500 to UTECH University and $53,500 to HELP, a
private charity registered under the Charities Act.
c. Bad debts are as follows:
• A loan of $76,130 to Derek Stan who failed to repayit.
• $63,017, owed by Simplicity Ltd. which was declared bankrupt.
• The balance is a percentage of receivables at year end which is deemed to be
bad.
d. Foreign travel expense included $268,210 for a vacation package for the
marketing manager’s and his family plane tickets. The remaining amount was for
a business trip to meet with potential suppliers.
e. Included in revenue is the item – Refunds from Income Tax of $88,900
f.
The capital allowances have been calculated at $1,260,500
Required:
i. Calculate the Corporation Tax Liability of Lindsay Co. for Year of Assessment: 2014 Based on Jamaica's Corporation Tax
ii. Present notes where applicable.
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