Quantro Enterprises Ltd. and Baizley Holdings Ltd. (BHL) are both 100% owned by Harold Baizley. Both companies are Canadian-controlled private corporations. Quantro operates a wholesale business and pays rent to BHL for the use of a warehouse property.

BHL owns only one assetthe warehouse building and related land that is rented by Quantro for $39,600 per year. The property was originally owned by Quantro but was sold to BHL several years ago as a means to reduce the risk exposure of this appreciating asset.

On December 31, 2020 (the year end of both companies), BHL sold the warehouse property to a third party for $407,000 (land $44,000, building $363,000). The property originally cost $352,000 (land $27,500, building $324,500).The undepreciated capital cost of the building at December 31, 2019, was $279,400.

One month before selling the warehouse property, BHL purchased a newly constructed warehouse property for $528,000. (land $55,000, building $473,000.).

Required:

Determine BHLs net income for tax purposes for 2020.

Recapture of CCA:

CCA on new warehouse:

Net property income:

Building capital gains:

Land capital gains:

Net taxable capital gains: