Reference no: EM132462709
The president of Purchaser Inc. (Purchaser) is planning to have the company acquire all the shares of Target Inc. (Target) on September 1, 2019. He has asked you to calculate what losses will be available in Target after he acquires it and explain the future deductibility of those losses after the purchase.
Target manufactures paper products, whereas Purchaser is a wholesaler of office supplies and equipment. Both companies are Canadian-controlled private corporations and have August 31 year ends. The loss carryovers of Target are expected to be as follows: president of Purchaser Inc. (Purchaser) is planning to have the company acquire all the shares of Target Inc. (Target) on September 1, 2019. He has asked you to calculate what losses will be available in Target after he acquires it and explain the future deductibility of those losses after the purchase.
Target manufactures paper products, whereas Purchaser is a wholesaler of office supplies and equipment. Both companies are Canadian-controlled private corporations and have August 31 year ends. The loss carryovers of Target are expected to be as follows:
Non-Capital Losses Net Capital Losses
2015 . $300.000 $ 50,000
2016. 250,000
2017 200,000
2018 150,000 100,000
2019 50,000
On August 31, 2019, Target will have the following assets which are still on hand:
Cost or Capital Cost UCCF MV
Manufacturing Equipment 1,000,000 NIL 300,000
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