Evergreen Trees Inc. is a CCPC operating in your province. The company has a December 31^st year-end.
Three asset sales occurred prior to the end of 20x1. The following information pertains to the net gain on the sale of the assets.
Asset 1: Building
The building was previously purchased for $90,000. At the time of the sale in 20x1, the accumulated amortization on the building was $10,000. The UCC balance was $65,000. The full payment of $110,000 was received before the end of the year.
Asset 2: Land
The land was purchased for $200,000 and sold in 20x1 for $250,000. Proceeds of $60,000 will be received this year. The remainder of the payment will be received in equal installments over the next eight years.
Asset 3: Marketable Securities
The company sold its entire public portfolio this year. The adjusted cost base of the shares was $100,000. The market value of the shares at the time of sale in 20x1 was $135,000. Selling costs on the sale were $5,000.
Required:
A) Calculate Evergreen Trees Inc.'s minimum taxable capital gain for 20x1.
B) Calculate Evergreen Trees Inc.'s minimum taxable capital gain for 20x2.

Question

Quizplus · Accepted Answer

The Answer of Evergreen Trees Inc. is a CCPC operating in your province. The company has a December 31^st year-end. Three asset sales occurred prior to the end of 20x1. The following information pertains to the net gain on the sale of the assets. Asset 1: Building The building was previously purchased for $90,000. At the time of the sale in 20x1, the accumulated amortization on the building was $10,000. The UCC balance was $65,000. The full payment of $110,000 was received before the end of the year. Asset 2: Land The land was purchased for $200,000 and sold in 20x1 for $250,000. Proceeds of $60,000 will be received this year. The remainder of the payment will be received in equal installments over the next eight years. Asset 3: Marketable Securities The company sold its entire public portfolio this year. The adjusted cost base of the shares was $100,000. The market value of the shares at the time of sale in 20x1 was $135,000. Selling costs on the sale were $5,000. Required: