CANADIAN TAX

AP 5-1 (CCA and Tax Planning) For its taxation year ending December 31, 2021, Marion Enterprises has determined that its net income before any deduction for CCA amounts to $53,000. The company does not have any Division C deductions, so whatever amount is determined as net income will also be its taxable income for the 2021 taxation year. On January 1, 2021, the company has the following UCC balances: Class 1 (building acquired in 2009) $876,000 Class 8 220,000 Class 10 95,000 Class 10.1 (Porsche-Cost $110,000) 16,500 Class 10.1 (Cadillac-Cost $45,000) 16,500 During 2021, the capital cost of additions to class 10 amounted to $122,000. The capital cost of properties disposed of during the year were $118,000 and the proceeds of disposition were $87,000. None of the properties were sold at amounts greater than their capital cost. There were still properties remaining in class 10 on December 31, 2021. There were no acquisitions or dispositions in classes 1, 8, or 10.1 during 2021. The company plans to sell the Porsche in 2022 and expects to receive about $75,000. During the preceding three taxation years, the company's taxable income totalled $39,000 for the three years. Required: A. Calculate the maximum CCA that could be claimed by Marion Enterprises for the taxation year ending December 31, 2021. Your answer should include the maximum that can be deducted for each CCA class. The calculation of UCC balances is not required. B. As Marion Enterprises' tax advisor, indicate how much CCA you would advise the company to claim for the 2021 taxation year and the specific classes from which it should be deducted. Provide a brief explanation of the reasons for your recommendation. In determining your solution, ignore the possibility that any 2021 losses can be carried forward to subsequent taxation years