During its taxation year ending December 31, 2019, Loser Inc. incurs a non-capital loss of $74,400 and an allowable capital loss of $120,000. Neither loss can be carried back. On January 1, 2020, using the provisions of ITA 87, the Company is amalgamated with Winner Ltd., a company that also has a December 31 year end. The combined company is named Combo Inc. and it elects to use a December 31 year end. The terms of the amalgamation give 16,000 Combo Inc. shares to the Loser Inc. shareholders, and 120,000 Combo Inc. shares to the Winner Ltd. shareholders.
During the year ending December 31, 2020, Combo Inc. has Net Income For Tax Purposes of $960,000, including over $240,000 in taxable capital gains. Will Combo Inc. be able to deduct the losses incurred by Loser Inc. prior to the amalgamation during its 2020 taxation year? Explain your conclusion.

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The Answer of During its taxation year ending December 31, 2019, Loser Inc. incurs a non-capital loss of $74,400 and an allowable capital loss of $120,000. Neither loss can be carried back. On January 1, 2020, using the provisions of ITA 87, the Company is amalgamated with Winner Ltd., a company that also has a December 31 year end. The combined company is named Combo Inc. and it elects to use a December 31 year end. The terms of the amalgamation give 16,000 Combo Inc. shares to the Loser Inc. shareholders, and 120,000 Combo Inc. shares to the Winner Ltd. shareholders.
During the year ending December 31, 2020, Combo Inc. has Net Income For Tax Purposes of $960,000, including over $240,000 in taxable capital gains. Will Combo Inc. be able to deduct the losses incurred by Loser Inc. prior to the amalgamation during its 2020 taxation year? Explain your conclusion.

During Its Taxation Year Ending December 31, 2019, Loser Inc