Quality Quo is a Canadian-controlled private corporation, (CCPC), carrying on business in Canada. For its year ended December 31, 20X6 Quality Quo earned income from the following sources:
• Active Business income
• Gain on sale of asset used in the active business
• Dividends from taxable Canadian corporations
Quality Quo is associated with one corporation, Pear Inc. Pear Inc. was allocated a Business Limit of $160,000 for 20X6.The taxable capital of the two corporations, Quality Quo and Pear Inc., combined is less than $10,000,000.
Required:
Describe in detail how each source of income is taxed federally.