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Problem 5 M s . Bast owns all the common shares o f Batterup L t d . , a Canadian - controlled private corporation,
Problem Bast owns all the common shares Batterup a Canadiancontrolled private corporation, which started operations Batterup has been quite profitable recent years. a result, ThreeStrikes a Canadian public corporation, has offered Bast $ for the assets,excluding cash, December The offer price reflects unrecorded goodwill $ Bast wants wind the company after the sale the assets. The pro forma balance sheet Batterup December follows: Cost UCC Assets Cash $ Account Receivable $ Inventory Land Building $ Equipment Marketable $ Liabilities Current Liabilities $ Future income taxes Shareholder's Equity Share Capital Retained earnings Total liabilities and equity $ Additional Information Batterup pays corporate tax overall combined rate active business income eligible for the small business deduction, active business income not eligible for the small business deduction, and initial rate for investment income, plus the additional refundable tax investment income. The corporation has a GRIP balance zero. The reserve for doubtful accounts December was $ Batterup and ThreeStrikes elected under section The company has a capital dividend account balance $ You have agreed the following for Bast: Compute the amount available for distribution the shareholder. Determine the components the distribution the shareholder. Compute the taxable capital gain allowable capital loss the disposition Bast's shares the winding the adjusted cost base Bast's common shares $ Explain the conditions for and advantages using a section election.
Problem
Bast owns all the common shares Batterup a Canadiancontrolled private corporation,
which started operations Batterup has been quite profitable recent years. a result, ThreeStrikes a Canadian public corporation, has offered Bast $ for the assets,excluding cash, December The offer price reflects unrecorded goodwill $ Bast wants wind the company after the sale the assets.
The pro forma balance sheet Batterup
December follows:
Cost UCC
Assets
Cash $
Account Receivable $
Inventory
Land
Building $
Equipment
Marketable
$
Liabilities
Current Liabilities $
Future income taxes
Shareholder's Equity
Share Capital
Retained earnings
Total liabilities and equity $
Additional Information
Batterup pays corporate tax overall combined rate active business income
eligible for the small business deduction, active business income not eligible for the small
business deduction, and initial rate for investment income, plus the additional refundable
tax investment income. The corporation has a GRIP balance zero.
The reserve for doubtful accounts December was $
Batterup and ThreeStrikes elected under section
The company has a capital dividend account balance $ You have agreed the
following for Bast:
Compute the amount available for distribution the shareholder.
Determine the components the distribution the shareholder.
Compute the taxable capital gain allowable capital loss the disposition Bast's
shares the winding the adjusted cost base Bast's common shares
$
Explain the conditions for and advantages using a section election.
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