Marlene is a shareholder in Katronics Inc., a Canadian-controlled private corporation. When she first invested in Katronics in 1999, she purchased 1,000 shares at $500 each, for a total investment of $500,000. In 2005, she sold shares in another small business and was able to claim a capital gains deduction of $242,288 to offset the resulting taxable capital gain. The base lifetime capital gains exemption for qualified properties is $892,218. This year, she sold her interest in Katronics Inc. for $1,200 per share. If she has a cumulative net investment loss (CNIL) of $32,000, on what amount will Marlene have to pay tax as a result of her sale of the Katronics shares?

Maximum Deduction = [(lesser of taxable capital gain and unused lifetime deduction limit) - CNIL balance]

$178,179

$244,000

$158,832

$278,000