Solution%20to%20Assignment%20Problem%20Ch14%28I%29

# Solution%20to%20Assignment%20Problem%20Ch14%28I%29 -...

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Solution to Assignment Problem Fourteen - 1 Part A - Non-Capital And Net Capital Losses The non-capital loss for the period to April 30, 2010 would be as follows: Loss As Per April 30, 2010 Income Statement (\$46,000) Required Accounts Receivable Adjustment (\$90,000 - \$76,000) ( 14,000) Building Election - Recaptured CCA (\$325,000 - \$300,000) 25,000 Equipment - Deemed CCA (\$60,000 - \$45,000) ( 15,000) Vehicles Election - Recaptured CCA (\$132,000 - \$110,000) 22,000 Business Loss For Period Ending April 30, 2010 (\$28,000) Net Income For Tax Purposes and Taxable Income for the period ending April 30, 2010, calculated as per the ITA 3 rules, would be as follows: ITA 3(a) - Non-Capital Income (Positive Amounts Only) Nil ITA 3(b) - Net Taxable Capital Gains (Losses): Elections Under ITA 111(4)(e): Gain On Land [(1/2)(\$262,000 - \$180,000)] \$ 41,000 Gain On Building [(1/2)(\$380,000 - \$325,000)] 27,500 Required Write-Down - ITA 111(4)(c) And (d) Loss On Temporary Investments - [(1/2)(\$45,000 - \$12,000)] ( 16,500) ITA 3(c) - Total \$ 52,000 ITA 3(d) - Business Loss ( 28,000) Net Income For Tax Purposes \$ 24,000 Net Capital Loss Carry Forward (See Following Explanation) ( 52,000) Taxable Income Nil On January 1, 2010, the net capital loss balance was \$96,000. However, this amount can only be deducted to the extent of \$52,000 (\$41,000 + \$27,500 - \$16,500), the net taxable capital gains realized

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during the current period. The unused net capital loss of \$44,000 (\$96,000 - \$52,000) will be lost as a
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## This note was uploaded on 01/31/2011 for the course MOS 4462 taught by Professor Ann during the Fall '10 term at UWO.

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Solution%20to%20Assignment%20Problem%20Ch14%28I%29 -...

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