The questions below are based on the following information:
Jolinda Morris has a depreciable property with a capital cost of $225,000, a UCC of $175,000, and a fair market value of $240,000. Because of his exceptional performance during the last year, she gives this property to her common-law partner Biff.
-What is the minimum increase in Net Income For Tax Purposes that Ms. Morris will record as a result of this gift if she does not elect out of ITA 73(1)?

Question

Quizplus · Accepted Answer

When Jolinda Morris gives the depreciable property as a gift, she will be deemed to have disposed of it at its fair market value of $240,000, resulting in a terminal loss of $15,000 ($240,000 - ($225,000 - $175,000)). However, since she is not electing out of ITA 73(1), this loss cannot be claimed and she will have a capital gain of nil. Therefore, there will be no increase in Net Income For Tax Purposes.

The Questions Below Are Based on the Following Information