AP $8-14($Involuntary Dispositions$$No ITA $44(6)$ Election$)$

On July $1,2023,$ the manufacturing plant of Janchek Ltd$.$ was expropriated by the provincial

government to make way for a new expressway. It is the only building that Janchek Ltd$.$ owns.

The land on which the plant was situated was purchased for $$88,000.$ The class $1$ building was

constructed at a capital cost of $$290,000.$ The company$$s taxation year end is December $31.$

On November $23,2023,$ after extended negotiations between Janchek and the provincial

government, the company agreed to and received compensation of $$130,000$ for the land and

$$430,000$ for the building. On January $1,2023,$ the UCC balance in class $1$ was $$248,000.$

On June $20,2024,$ a replacement manufacturing plant was purchased for $$1,050,000.$ Of this

amount, $$210,000$ was allocated to the land, with the remaining $$840,000$ allocated to the building.

As this was not a new building, it did not qualify for the $10\%$ CCA rate for non$-$residential buildings

that are used for manufacturing and processing.

Janchek Ltd$.$ will make any available elections to reduce the income tax effects of the replacement

of the expropriated property.

Required:

A$.$ Determine the income tax consequences in $2023$ that will result from the receipt of the expro$-$priation compensation.

B$.$ Indicate the impact on the results in Part A if elections were made under ITA $44(1)$ to defer

capital gains and ITA $13(4)$ to defer recapture.

C$.$ Determine the ACB of the land, the