Reference no: EM133028865

Question - Nicastro Ltd. has been in business for many years and, until recently, it has been fairly profitable. All of its shares are owned by Luigi Nicastro and it qualifies as a Canadian controlled private company. It has a December 31 year end.

The Company has always manufactured and sold fresh pasta, largely to restaurants and stores in the local Italian community. All went well until the beginning of 2019 when a local Italian newspaper discovered that Mr. Nicastro's real name was Stanley Kowalski and that he had never been to Italy. Demand for his Company's products immediately fell off, resulting in a net business loss for 2019 of $75,000.

In addition, during 2019, he was forced to sell some of the business assets in order to meet his cash flow needs. This resulted in an allowable capital loss of $48,000 [(1/2)($96,000)].

In early 2020, he began looking in the local community for a buyer for his Nicastro Ltd. shares. After considerable searching, he found a buyer and, as of June 1, 2020, all of the Nicastro Ltd. shares were sold to Stella d'Oro Inc.

For the period January 1, 2020 through May 31, 2020, Nicastro Ltd.'s accountant determined that there was a net business loss of $79,000. During this period, the Company had net rental income of $5,500 from an apartment above the store. There was also a disposition of preferred shares that resulted in an allowable capital loss of $7,200.

On May 31, 2020, Nicastro Ltd.'s assets had the following values:

Asset Cost UCC FMV Investments In TD Common Stock $32,000 N/A $28,000 Land 85,000 N/A 235,000 Building 427,000 $285,000 327,000 Equipment 120,000 60,000 50,000

Required - Calculate Nicastro's Net Income For Tax Purposes and Taxable Income for the period ending May 31, 2020. Indicate the amount of any non-capital and net capital loss carry forwards that would remain after the May 31, 2020 acquisition of control, using the assumption that Nicastro makes all of the available elections using the maximum elected values.