The 2019 financial statements of Clamour & Hammer Partnership have been prepared for accounting purposes, showing net income of $8,650. You have been requested to prepare the tax returns of the partnership and have gathered the following information related to business income:

(1) Cost of landscaping, expensed for accounting purposes. 15,000

(2) Legal expenses include an invoice to prepare an agreement for the purchase of specialized

construction equipment.. 13,800

(3) Administration expense contains an embezzlement loss caused by a dissatisfied employee 5,400

(4) Management bonus included in wages expense - $57,000 paid in 2019 & $83,000 accrued

and paid in October, 2020. 140,000

(5) Selling expenses included membership fees in a local golf and country club.. 151,500

(6) Selling expenses includes amounts paid for meals and entertainment at the golf club 49,500

(7) Legal and accounting fees were deducted relating to the renegotiation of a bank loan 35,100

(8) Bad debt reserve accrued on the specific identification of uncollectible accounts receivable 8,400

(9) General and administrative expenses included charitable donations... 45,000

(10) The statements included a provision for current and deferred income taxes. 213,000

(11) Volume rebates and purchase discounts amounted to... 31,250

(12) Accounting depreciation expensed.... 294,000

(13) Term insurance premiums on the life of the senior partner were expensed. This policy

was required by the bank as collateral for the granting of an operating loan 10,000

In addition to the above, you have found the following U.C.C. balances reflected on the C.C.A. schedule of Clamour & Hammer Partnership as at December 31, 2018.

Class 1 (4%) Building.................................................................................................................. $ 220,000

Class 8 (20%) Office furniture and equipment............................................................................ 60,000

Class 10 (30%) Trucks................................................................................................................. 80,000

Class 13 (S/L) (See 1 below)........................................................................................................ 162,500

Additional information and transactions during 2019:

1) The Class 13 balance relates to renovations on a warehouse in 2016 at a cost of $225,000. The warehouse lease had 6 years remaining in 2016, with 2 successive renewal options of 3 years each.

2) The existing building, originally acquired at a cost of $290,000 in 2011, was sold for $195,000. A new concrete manufacturing building was purchased in 2019 for $750,000 (Class 1MB - 10%).

3) New office furniture was purchased for $20,000. This purchase replaced damaged items which had been sold earlier in the year for their depreciated net book value of $5,000. The original cost of these items was $15,000.

4) Three new trucks were purchased at a cost of $29,000 each. Three old trucks acquired during 2012 for $22,000 each, were disposed of for proceeds of $5,500 each.

5) Computer application software was purchased during the year for $750 (Class 12 - 100%). This software was to be depreciated for accounting purposes.

6) Further leasehold improvements were made to the warehouse in 2019 for a cost of $52,000.

7) A new passenger vehicle was purchased in 2019 for $70,000 (Class 10.1 - 30%).

REQUIRED:

Determine the income from business for tax purposes of Clamour & Hammer Partnership for the 2019 taxation year based on the above information. Indicate in your calculation of income from business for tax purposes, by way of zero, all those items you consider do not require adjustment. Prepare also the necessary schedule and calculations to show the maximum capital cost allowance that may be deducted, as determined from the above information.

Jurisdiction in Canada

CAPITAL COST ALLOWANCE SCHEDULE
1	2	3		4		5		6		7		8	9		10
	UCC Start					Adjusted				Reduced		Rate			UCC End
Class	of Year	Additions		Disposals		UCC		Additions		UCC		%	CCA		of Year