TAXATION 2 questions

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Sally Frampton has two Class 1 rental properties. Property 1 has a UCC at the beginning of the year of $550,000 and has net rental income before the deduction of CCA of $43,000. Property 2 has a UCC of $985,000 at the beginning of the year, but has incurred a net rental loss before CCA of $26,000. What is the maximum amount of CCA that Sally can claim this year?

Do you separate and why?

How much CCA would be calculated if deductible?

What would be the maximum to deduct?

Involuntary Deposition

2019, Leblanc Ltd. replaced a Class 8 asset destroyed by a fire in May, 2018, with another Class 8 asset that cost $500,000. Insurance proceeds of $300,000 were received in December, 2018. The original cost of the destroyed asset was $250,000. These were the only Class 8 transactions in either 2018 or 2019. The UCC of Class 8 at the beginning of 2018 was $175,000. The Company has a December 31 year end. The sole shareholder of Leblanc Ltd. wants to minimize the Company’s Tax Payable in all years.


A. Indicate the tax consequences of the involuntary disposition that will be reported in the Company’s 2018 tax return.

B. Indicate the changes that will be reported in the amended 2018 return, provided the Company makes elections under ITA 13(4) (to defer recapture) and ITA 44(1) (to defer capital gains).

C. Calculate the maximum CCA that Leblanc Ltd. will be able to claim for Class 8 assets for 2019 assuming the Company makes elections under ITA 13(4) and ITA 44(1).

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