[ITA: 9(1); 13(1); 18(1)(a), (b); 20(1)(a), (b); 40(1); 78(4); Reg. 1100(1), (2), (3); 1101(5p)] KC Restaurants Ltd. was incorporated on July 1, 2019, and began operations immediately. By December 31, 2019 (the corporation's first year end), three new restaurants had been opened, two of which were franchises. During the first few months of operations, the following expenditures were made by KCR: Legal fees for the cost of incorporation Cooking equipment including food processors Franchise #1 Franchise #2 Cutlery, plates, glasses, and cups Computer software for restaurant accounting Building (constructed after March 18, 2007) $ 4,000 320,000 40,000 80,000 115,000 3,000 220,000 Franchise #1 was purchased on October 1, 2019, and will expire after 120 months. Franchise #2, which was acquired on July 1, 2019, has no expiry date and will continue indefinitely, provided that the terms of the franchise agreement are met. Other equipment, such as tables and chairs, was leased. For the taxation year ending December 31, 2019, KCR claimed a deduction for the maximum available CCA. On December 1, 2020, KCR sold the non-franchised restaurant. The sale price included these proceeds: Goodwill Land Building Cooking equipment Cutlery, plates, glasses Proceeds $ 60,000 15,000 Original cost -0- 12,000 230,000 220,000 40,000 72,000 26,000 37,000 The Income Statement prepared for accounting purposes for the year ended December 31, 2020, with additional information, is provided below: Sales Cost of sales Gross profit Rent, property taxes, and insurance Salaries and wages General overhead Advertising and other Gain on sale of goodwill Net losses on sale of fixed assets Net income $1,845,000 1,011,000 834,000 $ 72,000 275,000 301,000 96,000 744,000 90,000 60,000 (22,000) $128,000