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Indicate the income tax consequences

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Question - In 2022, a company replaced a Class 8 property destroyed by a fire in May 2021 with another Class 8 property that cost $500,000. Insurance proceeds of $300,000 were received in December 2021. The capital cost of the destroyed property was $250,000. These were the only Class 8 transactions in either 2021 or 2022. The UCC of Class 8 at the beginning of 2021 was $175,000.

The company has a December 31 year end. The sole shareholder of Leblanc Ltd. wants to minimize the company's income tax in all years.

Required - Indicate the 2021 income tax consequences of the involuntary disposition.

Reference no: EM133087963

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