20. Marty owns an auto body repair shop. The business has no real value without him and the building is pretty much a mess after being full of paint fumes for all those years but the land is worth $140,000 - the land is also pretty much of a mess and it will cost a buyer about $100,000 to clear the land for another use. The adjusted cost base is $150,000 - $80,000 for the land, $70,000 for the building. He is very fond of animals and now wants to give the land and building to the Toronto Humane Society - he is going to retire and live in his daughter's basement (she's not too happy but since she will inherit a considerable amount of money when he dies, she has consented to this arrangement). Mark shuts down his business on December 15, 2018. His net income for the year was $45,000. He has taken Capital Cost Allowance of $66,000 on the building. HINT: Review Example 16 from chapter 12. a) If this were a cash donation, what is the maximum he could claim on his 2018 tax return? (1 mark) b) Including recapture, what is his total income? (2 marks) c) How much can he claim as a tax deduction for 2018? (2 marks) d) If his net income is $13,000 a year forever, how much of the donation will he be able to claim in total assuming he does not die for 30 years (he has lots of money but does not like to spend it. This is OK with his daughter!) (2 marks) 20. Marty owns an auto body repair shop. The business has no real value without him and the building is pretty much a mess after being full of paint fumes for all those years but the land is worth $140,000 - the land is also pretty much of a mess and it will cost a buyer about $100,000 to clear the land for another use. The adjusted cost base is $150,000 - $80,000 for the land, $70,000 for the building. He is very fond of animals and now wants to give the land and building to the Toronto Humane Society - he is going to retire and live in his daughter's basement (she's not too happy but since she will inherit a considerable amount of money when he dies, she has consented to this arrangement). Mark shuts down his business on December 15, 2018. His net income for the year was $45,000. He has taken Capital Cost Allowance of $66,000 on the building. HINT: Review Example 16 from chapter 12. a) If this were a cash donation, what is the maximum he could claim on his 2018 tax return? (1 mark) b) Including recapture, what is his total income? (2 marks) c) How much can he claim as a tax deduction for 2018? (2 marks) d) If his net income is $13,000 a year forever, how much of the donation will he be able to claim in total assuming he does not die for 30 years (he has lots of money but does not like to spend it. This is OK with his daughter!) (2 marks)
