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Cga Tx2 Assignment

In: Business and Management

Submitted By vjmtran4
Words 1526
Pages 7
Assignment 3

Question 2

Forgiven Amount, Beginning Balance $100,000

Non-capital loss carryforwards [80(3)(a)]
($11,000 + 15,000) 26,000 $74,000
Net-capital loss carryforwards [80(4)(b)]
1989 (3,000 x 3/2) = 4,500
1994 (12,000 x 4/3) = 16,000 20,500 20,500 $53,500
Capital costs of class 8 property [80(5)]
UCC 14,000
CC 60,000 (cannot be more than UCC) 14,000 $39,500

ACB of Land [80(9)] 9,000
Forgiven Amount, Ending Balance $30,500
Added to Income (50%) [80(13)] $15,250

Reduction [61.3(1)]
Lesser of: Added amount under 80(13) $15,250 A-2(B-C-D-E) A = 15,250 B = 120,000 C = 115,000 D = 0 E = 50% x (10,000-15,250) = 0 15,250 – 2(120,000-115,000-0-0) = $5,250 $5,250 $10,000
Reserve [61.4]
Spread over 5 years = 10,000 x 1/5 = $2,000 $2,000

$2,000 added to income, $8,000 spread over the next 4 years
Question 3

PART A

The shares of Kipper Ltd. do not qualify for the Capital Gains Deduction (CGD) because, under subsection 110.6(2.1), the corporation is not a Qualified Small Business Corporation (QSBC). There are three criteria for qualifying as a SBC under subsection 110.6(2.1): • Within 24 months preceding the transaction, the shares must not be held by anyone other than the individual owner or persons related to the individual owner. • Within 24 months preceding the transaction, more that 50% of the FMV of the assets in the corporation are used for business in Canada. • At the time of disposal, at least 90% of the FMV of the assets in the corporation are used for business in Canada.

The shares of Kipper Ltd. do not qualify because they do not meet the 24-month 50% rule or the 90% rule. The treasury bills and shares of public corporations are not assets used for business,…...

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