Carla Armitage owns 100% of the common shares of Extra Ltd., a Canadian-controlled private corporation operating a wholesale business in eastern Canada. Extra's fiscal year end is May 31, 2021. It is now April 15, 2021, and Carla has just signed a letter of intent to sell the wholesale business to Q Ltd. The initial discussions involved the sale of specific assets of Extra, but a sale of the shares of the company may also be considered. Carla has requested your assistance in estimating the tax liability to Extra if the business assets are sold. Information relating to the sale and to the current year's operating income is provided below. 1. The balance sheet of Extra at May 31, 2021, is estimated as follows: Accounts receivable Inventory, at cost Land, at cost Building, at book value Equipment, at book value Licence, at book value Liabilities Share capital Retained earnings $ 128,000 408,000 38,000 288,000 178,000 48,000 $1,088,000 $ 524,000 1,000 563,000 $1,088,000 2. Net income before income tax and net gains from the sale of assets for the year ended May 31, 2021, are estimated as follows: Income from wholesale operations Dividend income Net income before tax $498,000 1,800 $499,800