During 2017, Laiken Limited sold its only Class 3 asset. At the time of sale, the balance of the undepreciated capital cost for this class was $37,450. The asset originally cost $129,500.
Instructions
(a) Calculate recaptured CCA, capital gains, and terminal losses, if any, assuming the asset was sold for proceeds of
(1) $132,700,
(2) $51,000, and
(3) $22,000.
(b) Assume the tax rates are scheduled to increase for 2017. What strategy could Laiken use to reduce its taxes payable that are due to the recapture on the disposal of the asset?