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Back to the Futon is purchased by an unrelated third party and undergoes an acquisition of control on January 1, 2021 On December 31, 2020,

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Back to the Futon is purchased by an unrelated third party and undergoes an acquisition of control on January 1, 2021 On December 31, 2020, the company had 2 assets. . a piece of land with an adjusted cost base (ACB) of $150,000 and a fair market value (FMV) of $65,000 a depreciable asset with a capital cost of $100,000, an undepreciated capital cost (UCC) of $75,000, and a FMV of $200,000 Back to the Futon was operating in a not loss position prior to its acquisition of control. Assuming Back to the Futon will continue its business, post acquisition of control and will be profitable in 2021, what write-downs and elections are available to Back to the Futon? Back to the Futon has a goal of optimizing the amount of losses carried forward to the 2021 year while minimizing tax payable. O Back to the Futon should elect to recognize an allowable capital loss of $42,500 on the land at the end of 2020. A recapture of $25,000 and a taxable capital gain of 50,000 should also be recorded. Back to the Futon will be required to write the land down to its fale market value and recognize an allowable capital loss of $42,500 at the end of 2020. A deemed disposition on the depreciable asset should be elected at a value of $185,000, triggering recapture of $25,000 and a taxable capital gain of 542.500. Back to the Futon will be required to write the land down to its FMV and recognize an allowable capital loss of $43.500 at the end of 2020. No elections are available. None of the other options Back to the Futon should elect to recognize an allowable capitat loss of 542,500 on the land at the end of 2020 A deemed disposition of the depreciable asset should be elected at a value of $100,000. This results in recapture of $25,000

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