Keyword Ltd$.$ is a CCPC with a December $31$ taxation$$ year$-$end. The company was incorporated $10$ years ago. Due to increased competition and an inability to adapt to the rapidly changing technological advancements in the$$ industry, it appears unlikely that Keyword Ltd$.$ will be able to earn a satisfactory return on its invested capital in the future. As a$$ consequence, the shareholders have agreed to liquidate the$$ corporation's assets and dissolve the corporation.

In contemplation of the$$ dissolution, a balance sheet has been prepared based on the tax costs of its property and liabilities as of May$31,2023.$

Balance sheet

Keyword Ltd$.$ Balance Sheet

As of May $31,2023$

Inventories $($FMV and tax cost are equal$)$

$$36,000$

RDTOH $($non$-$eligible$)$

$28,000$

Land$$ACB

$627,000$

Building$$UCC

$582,000$

Total

$$1,273,000$

Liabilities

Nil

PUC

$$450,000$

CDA

$217,000$

Other retained income

$606,000$

Total

$$1,273,000$

Additional Information

$1.$

The FMV of the land is $ $1$ comma $245$ comma $000.$

$2.$

The capital cost of the building is $ $755$ comma $000,$ and the FMV is $ $1$ comma $178$ comma $000.$

$3.$

The ACB and PUC of the common shares are both $ $450$ comma $000.$

$4.$

The GRIP balance is always nil.

$5.$

All of the corporate properties are sold on June$1,2023,$ for their respective FMV$.$ The$$ after$-$tax proceeds are distributed to shareholders on June$20,2023.$ The company is dissolved June$30,2023.$

$6.$

The provincial income tax rate on corporate income eligible for the small business deduction$($SBD$)$ is$3\%$ and$13\%$ for all other corporate income.

$7.$

No dividends have been paid in the previous two years.

$8.$

No income was earned for the period January$1,2023,$ to June$30,2023.$

$9.$

The adjusted aggregate investment income$($AAII$)$ in $2022$ was nil.

Requirement A$.$ Calculate the amount that will be available for distribution to the shareholders on the dissolution of the company.

Start by calculating the taxable capital gains and active business income$($recapture$)$ of the corporation. $($For entries with a$$ $$0$ balance, make sure to enter$"0"$ in the appropriate$$ column.$)$

Property

Taxable Capital Gains

Active Business Income

Inventories

Taxable capital gains:

On land

On building

Recapture on building

Total

Part $2$

Calculate the corporate income tax payable.

Total taxable capital gains

Total active business income

Taxable income for $2023$

Part $3$

$$Next$,$ calculate the corporate income tax payable. $($Round your answers to the nearest whole$$ dollar.$)$

Federal income tax on business income

Federal income tax on taxable capital gains

Part I tax payable

Provincial income tax on business income

Provincial income tax on taxable capital gains

Corporate income tax payable

Part $4$

$$Now$,$ calculate the ending$$ non$-$eligible RDTOH balance. $($Round your answers to the nearest whole$$ dollar.$)$

Opening non$-$eligible RDTOH

Refundable Part I tax

Ending non$-$eligible RDTOH balance

Part $5$

$$Next$,$ calculate the funds available for distribution. $($Round your answers to the nearest whole$$ dollar.$)$

FMV $($sales proceeds$)$

Inventories

Land

Building

Sale proceeds

Corporate income tax payable

Dividend refund

Total funds available for distribution

Part $6$

In this$$ step, calculate the ending capital dividend account$($CDA$)$ balance.

Initial CDA balance

Capital gain on the land

Capital gain on the building

Ending CDA balance

Part $7$

Requirement B$.$ Determine the income tax consequences to the shareholders as a result of the corporate distributions on the cancellation of their shares. Assume that any elections or designations are made to minimize any income taxes payable by the shareholders.

In this$$ step, calculate the taxable$$ non$-$eligible dividend.

Distribution to shareholders

Less: PUC of common shares

ITA $84(2)$ deemed dividend

Less: Capital dividend$$ITA $88(2)($b$)$

Taxable non$-$eligible dividend

Part $8$

$$Finally$,$ calculate the capital gain consequences of the cancellation of the shares as a result of the dissolution of the corporation. $($For an entry with a$$ $$0$ balance, make sure to enter$"0"$ in the appropriate input$$ field.$)$

Distribution to shareholders

Less: ITA $84(2)$ deemed dividend

Adjusted POD

Less: ACB of common shares

Capital gain