Nanaimo Corporation acquires 100 percent of the shares of its subsidiary Island Inc. on December 31, 2013 for $2,750,000. At that time, Island Inc. owned one non-depreciable asset, a piece of vacant land with an adjusted cost base of $200,000 and a fair market value of $350,000. Since January 1, 2013, Island Inc. has paid dividends totaling $300,000 to Nanaimo Corporation. On December 31, 2020, when the net assets of Island Inc. have a tax value of $2,200,000, Island Inc. is wound up into Nanaimo Corporation under ITA 88(1). Nanaimo Corporation then sells the vacant land that was owned by Island Inc. for $1,600,000. What taxable capital gain will Nanaimo report as a result of this sale?

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The Answer of Nanaimo Corporation acquires 100 percent of the shares of its subsidiary Island Inc. on December 31, 2013 for $2,750,000. At that time, Island Inc. owned one non-depreciable asset, a piece of vacant land with an adjusted cost base of $200,000 and a fair market value of $350,000. Since January 1, 2013, Island Inc. has paid dividends totaling $300,000 to Nanaimo Corporation. On December 31, 2020, when the net assets of Island Inc. have a tax value of $2,200,000, Island Inc. is wound up into Nanaimo Corporation under ITA 88(1). Nanaimo Corporation then sells the vacant land that was owned by Island Inc. for $1,600,000. What taxable capital gain will Nanaimo report as a result of this sale?

Nanaimo Corporation Acquires 100 Percent of the Shares of Its