Corporate Group Information:
We have a bunch of Farming Corporations. In the Identification Section, TaxCycle does not automatically pick up whether or not the target corporation (of the corporate linking file) is a Farming or Fishing corporation. No big deal; however, if you manually enter that in the source file, I find that TaxCycle then complains “CGI form does not match latest corporate data” When you click on “show first difference” there are no differences. The only way to remove the nag is to leave the farming or fishing corporation box “unchecked” on both files.
In that same CGI (Corporate Group Information) worksheet the Schedule 49 (beside box 300) area picks up or carry’s forward the prior year’s “Taxable Income” from the source corporation, but does not pick up the Taxable Income of the Target Corporation. It shows as zero, although you can enter the value for last year’s taxable income.
Schedule 3 & Share Redemptions (S100 line 3741)
TaxCycle does a great job of prompting you to complete line 460 of schedule 3 if you enter an amount on lines 3700 through 3702 (dividends) on the schedule 100. Many of my clients have gotten older, frozen their growth shares, and are in the process of redeeming their special (freeze) shares within their corporation. Unless there is a subsection 55(2) safe income issue most of these share redemptions are considered to be “deemed dividends”. I would like to be able to record these share redemptions on line 3741 of the Schedule 100, however, if I complete line 460 on Schedule 3 to record these “deemed dividends” TaxCycle complains (on Schedule 3) there is a difference between dividends paid on the S100 and dividends paid on the Schedule 3.
It would be nice if line 3741 of the Schedule 100 (Share Redemptions) could be treated the same as lines (3700, 3701, and 3702) to satisfy line 460 of Schedule 3 from kicking out the dividends on line 460 of S3 don’t equal the dividends on the S100 warning.
Similarly…
Schedule 6 & Capital Gains Dividends
If you make an entry on line 8210 or 8211 on the Schedule 125 TaxCycle prompts you to make an entry on the Schedule 6 for the disposal of assets. Unfortunately, the Schedule 100 doesn’t give you a great option to report for capital gains flowed out to a corporation from lets say a mutual fund investment. For lack of a better account, I generally use GIFI code 8211 (realized gains/losses on sale of investments) to report these distributions. Unfortunately, TaxCycle then wants to see an amount in any of Parts 1 through 7 of Schedule 6 for that same amount.
Apart from using line 8211 on Schedule 125 I generally report these capital gain distributions (gains on T3’s etc) in Part 8 (line 875) of the Schedule 6. Reporting the amount on line 875 of the Schedule 6 does not get rid of the diagnostic warning. It would be convenient if making an entry on line 875 in Part 8 of the Schedule 6 would satisfy the diagnostic warning.
I do like the diagnostic warnings for the Schedule 3 and Schedule 6 as it does prompt me not to forget to complete these schedules, so I don’t want to permanently turn off the warnings.