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Part A - Non-Capital And Net Capital Losses

The required write-downs and the use of all available elections would have the following results:

Business Taxable
Income Capital Gains
Required Write-Down On Temporary Investments
[(1/2)($7,000 - $32,000)] ($12,500)
Required Write-Down On Accounts Receivable
($110,000 - $123,000) ($13,000)
Election On Land [(1/2)($115,000 - $100,000)] 7,500
Election On Building - Taxable Capital Gain
[(1/2)($352,000 - $323,000)] 14,500
Election On Building - Recaptured CCA
($323,000 - $313,310) 9,690
Required Write-Down On Equipment
- Deemed CCA ($5,000 - $33,120) ( 28,120)
Election On Vehicles - Recaptured CCA
($25,000 - $21,420) 3,580
Election On Copyrights [(1/2)($42,000 - Nil)] 21,000
Totals ($27,850) $30,500

Net Business Loss With the use of these elections, Net Business Income for the period ending May
31, 2017 would be as follows:

Net Business Loss As Per May 31, 2017 Income Statement ($34,000)
Total Of Required Write-Downs And Recaptured CCA
(From Preceding Table) ( 27,850)
Net Business Loss For Period Ending May 31, 2017 ($61,850)

Net And Taxable Income Net Income For Tax Purposes and Taxable Income for the period ending
May 31, 2017, calculated as per the ITA 3 rules, would be as follows:

ITA 3(a) - Non-Capital Income (Positive Amounts Only) Nil

ITA 3(b) - Net Taxable Capital Gains (Losses):
Total Of Required Write-Downs And Taxable Capital Gains
(From Table) $30,500
ITA 3(c) - Total $30,500
ITA 3(d) - Net Business Loss ( 61,850)
Net Income For Tax Purposes Nil
Net Capital Loss Carry Forward
(Limited To Amount Included Under ITA 3(b)) ( 30,500)
Taxable Income Nil
Lost Net Capital Loss The net capital loss balance that will be lost is calculated as follows:

Net Capital Loss Carry Forward On Land Sale From 2016$36,000
Amount Deducted For Period Ending May 31, 2017 ( 30,500)
Net Capital Loss Lost On Acquisition Of Control $ 5,500

Non-Capital Loss Carry Forward The non-capital loss carry forward would be calculated as follows:

Business Loss For Period $ 61,850
Net Capital Loss Deducted 30,500
Subtotal $ 92,350
Income Under ITA 3(c) ( 30,500)
Non-Capital Loss For The Period Ending May 31, 2017 $ 61,850
Non-Capital Loss Carry Forward From 2015 $128,000
Amount Used For 2016 Income ( 16,000) 112,000
Non-Capital Loss Carry Forward At May 31, 2017 $173,850

Part B - Non-Capital Loss Carry Forward In 2017
The Net Income For Tax Purposes for the 7 month period ending December 31, 2017 will be $70,000
($123,000 - $53,000). As none of this income was from the Janice’s publications, none of the non-
capital loss carry forward can be used in this period. This will leave the non-capital loss carry forward
balance at December 31, 2017 unchanged at $173,850.

Part C - Loss Carry Forward In 2018
Net Income For Tax Purposes for 2018 will be $159,000 ($185,000 - $26,000). As all of this income is
from Janice’s publications, the 2018 Net Income For Tax Purposes can be completely eliminated by
using the available non-capital loss carry forward. This will leave a non-capital loss carry forward of
$14,850 ($173,850 - $159,000).