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1、Question1(15marks)JenJavronisanarchitect.ShewasemployedbyUltimateDesignLtd.untilMarch 12, 2010.FromJanuary 1toMarch12,2010,sheearned$48,000insalaryandothertaxablebenefits.Aftertakingafewweeksofvacation,shestartedtoworkasaself-employedarchitectonApril 1, 2010.ThefiscalperiodofherbusinesswillendonDe
2、cember 31.SinceJenhasnotaxknowledge,shehascometoconsultwithyouonafewmatters:a.Jenneeds$30,000asworkingcapitalforherbusiness.Shealsowantstobuyacondoforherpersonaluse.Thecostofthecondois$325,000.Jenpresentlyhas$70,000atherdisposal.Shewouldliketoknowifitwouldbebetter,fromataxpointofview,tomakea$70,00
3、0downpaymentonthecondoandborrow$30,000fromabanktosupplytheworkingcapitalforthebusiness,ortopersonallysupplythe$30,000workingcapitalandmakea$40,000downpaymentonthecondo.b.Tooperateherbusiness,JenpurchasedasmallbuildingonMainStreet.Thebuildingisold,andmajorrepairswereneededtocontinueefficientoperati
4、ons.Jenwantstoknowiftheexpensesforadditionalrepairstothebuildingwillbeentirelydeductibleintheyeartheyaremade.Thefollowingexpensesareanticipated:oinstallinganewrooforeplacingalltheoldpipesinthebuildingoelectricalrewiringofthewholebuildingoaddingacoveredporchatthebackofthebuildingc.Jenistakingoutpro
5、fessionalliabilityinsurancefortheperiodcoveringApril1, 2010toDecember 31, 2011.Jenwondersifthepremiumswillbe deductibleandifso,how.RequiredAnswereachqueryJenJavronhassubmittedtoyou.JustifyyouranswersandgivetheappropriatereferencestotheITA.(5marksforeachquery)Question2(5marks)TomWartson,CGA,started
6、hisownpublicaccountingpracticein2010whenthecompanyhehadworkedforsince1998wentbankruptandhelosthisjob.DuringalltheyearsTomworkedforthecompany,hewasneverinvolvedinanycorporatetaxmattersandhedidnotkeepup-to-dateinthisarea.Sincehestartedhispractice,Tomhasnotyethadthetimetotaketaxcoursesorseminars,andh
7、ehasnotpurchasedanytax-relatedmanualsorsubscribedtoanytaxreportingservice.Oneofhisnewclientshasconsultedhimonacomplexcorporatetaxmatterandrequiresananswerintwo days'time.RequiredCommentonatleasttwomajorethicaliss
