Assignment Problem Eight - 1 (Involuntary Dispositions - No ITA 44(6) Election) On July 1, 2020, the manufacturing plant of Janchek Ltd. was expropriated by the provincial government in order 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 building, a Class 1 asset, was erected at a cost of $290,000. The company's year end is December 31. On November 23, 2020, after extended negotiations between Janchek and the provincial government, the company received compensation in the amount of $130,000 for the land and $430,000 for the building. On January 1, 2020, the UCC balance in Class 1 was $248,000. On June 20, 2021, a replacement manufacturing plant was purchased for a total cost of hoped $1,050,000. Of this amount, $210,000 was allocated to the land, with the remaining $840,000 going to the building. As this was not a new building, it did not qualify for the 10 percent CCA rate that is available for manufacturing and processing buildings. Janchek Ltd. will make any available elections in order to reduce the tax effects of the replacement of the expropriated property. Required: A. Determine the tax effects in 2020 that will result from the receipt of the expropriation compensation. B. Indicate how the results in Part A could be altered through the application of ITA 44(1) (to defer capital gains) and ITA 13(4) (to defer recapture) in an amended 2020 return. C. Determine the adjusted cost base of the land and the building, as well as the UCC of the building, subsequent to the replacement of these assets and the application of ITA 44(1) (to defer capital gains) and ITA 1314) (to defer recapture). iti come Assignment Problem Eight - 1 (Involuntary Dispositions - No ITA 44(6) Election) On July 1, 2020, the manufacturing plant of Janchek Ltd. was expropriated by the provincial government in order 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 building, a Class 1 asset, was erected at a cost of $290,000. The company's year end is December 31. On November 23, 2020, after extended negotiations between Janchek and the provincial government, the company received compensation in the amount of $130,000 for the land and $430,000 for the building. On January 1, 2020, the UCC balance in Class 1 was $248,000. On June 20, 2021, a replacement manufacturing plant was purchased for a total cost of hoped $1,050,000. Of this amount, $210,000 was allocated to the land, with the remaining $840,000 going to the building. As this was not a new building, it did not qualify for the 10 percent CCA rate that is available for manufacturing and processing buildings. Janchek Ltd. will make any available elections in order to reduce the tax effects of the replacement of the expropriated property. Required: A. Determine the tax effects in 2020 that will result from the receipt of the expropriation compensation. B. Indicate how the results in Part A could be altered through the application of ITA 44(1) (to defer capital gains) and ITA 13(4) (to defer recapture) in an amended 2020 return. C. Determine the adjusted cost base of the land and the building, as well as the UCC of the building, subsequent to the replacement of these assets and the application of ITA 44(1) (to defer capital gains) and ITA 1314) (to defer recapture). iti come