Mr. Lotsaluck incorporated a company in 2008 in a province with a 20% corporate tax rate on active business income, a 40% total corporate tax rate on other income, before the 6 2/3% additional refundable tax, and a 46% combined personal tax rate (including a 17% personal provincial tax on income rate), taking one share with a paid-up capital value of $1 and a note representing a loan to the company of $499,999. The company, Luck Unlimited Limited, a private corporation, purchased the assets of a business in the same year for $500,000. The purchase price was allocated to the land and building of the business in the amount of $400,000 and to goodwill in the amount of $100,000. However, before the business had commenced, the company sold the assets of the business for $700,000, including $170,000 for goodwill.
REQUIRED
Assume that the sale of land and building was considered to result in a capital gain. How much of the $700,000 received in the corporation would Mr. Lotsaluck retain, if he removed all of this amount from the corporation.