Compute the minimum income

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Question - You are the tax consultant for Deferit Ltd., a wholesale company which has a December 31 year-end. The owner-manager of the corporation wants to minimize Deferit's income for tax purposes. You are given the following information.

In June 2019, Deferit replaced a building in Class 1 (the only asset in the class) destroyed by fire in 2018 with another building (new and unused non-residential building) that cost $600,000. Insurance proceeds of $400,000 were received in May 2018. The original cost in 2007 of the destroyed building was $350,000. This was the only capital asset transaction in 2018 and 2019. The undepreciated capital cost of Class 1 at the beginning of 2018 was $238,000.

Required - Compute the minimum income that must be reported for the corporation's 2018 taxation year after the above disposition and purchase transactions have taken place. Indicate the ACB and the UCC, before CCA, of the new building.

Reference no: EM132605879

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