You have just been hired as a tax analyst specializing in Business Tax by Diodati, Kerrio and Pietrangelo LLP ("DKP") a major Canadian accounting firm.
As part of interview process DKP required you to complete a knowledge-based interview with specific tax concepts and rules. The firm was particularly impressed with your immediate understanding on how to prepare a corporate tax return (T2) and compute corporate income taxes. Jim Diodati, CPA, CA is the head tax partner at DKP and is excited to have you on board.
You have now completed your new hire orientation at DKP and Jim sends you an email to meet him in the firm's boardroom. Based on your discussions from the meeting he wants to assign you Angie's Amazing Getups Incorporated ("client"). This is a new client to the firm and Jim has negotiated a tax return preparation fee of $25,000.
Jim did some initial information gathering and found out the following:
The client incorporated on January 4, 2014, the address of the company is 1234 Fanshawe St, London Ontario, L2Y 4W3. The contact person and signing officer of the client is Angela Q. Snodgrass and her telephone number is 519-222-2222. The business number of the company is 1234567 RC 0001. The total amount of federal instalments in the current year were $205,000. Jim left the rest of the corporation information gathering for you to complete.
Prior to leaving the meeting with Jim, he informs you that the tax return (T2) must be completed by December 22, 2017 at 11:59pm. In addition to the tax return he would like a memorandum explaining the adjustments, explanations and/or assumptions taken on T2 (including Income Tax Act and/ or other resource references) so it makes it easy for him to review over the holidays. Lastly, he would like for you to include a client transmittal letter as part of the package.
You are extremely eager and excited to get started on this engagement. You setup a meeting with the client contact, Angela Q. Snodgrass, to gather further information.
The meeting with Angela went very well. The notes from your meeting can be found on pages 663-666 of the Byrd and Chen textbook (AP 13-8).
Required:
1) Prepare the 2017 corporate tax return for Angie's Amazing Getups Incorporated using Tax Profile software
2) Complete a memorandum that explains the adjustments, explanations and/or assumptions used in the corporate tax return. Where applicable use Income Tax Act and/ or other applicable references.
3) Complete a client transmittal letter addressed to the client.