Becky is a BCIT alumni who graduated from the BCIT Accounting Program and has since then focused her attention on building a business of wholesale beauty products, named Beauty & You Ltd., a Canadian controlled private corporation. Becky is now contemplating the sale of the Beauty & You Inc.. and is wondering if she would be able to enter into any transactions to reduce her capital gain on the sale of the Beauty & You Inc..

Becky invested in the Beauty & You Inc.by acquiring one common share in exchange for $1.00. No other investments in the Beauty & You Inc.have been made. Becky has found a buyer, who is offering $350,000 for the one common share of the Beauty & You Inc..

In the past, Becky had invested in a variety of other business, some which worked out, but some that did not. In 1997, Becky sold shares and used the capital gains exemption to completely shelter the taxable capital gain of $45,000. In 2016, Becky had to sell shares of another small business corporation at a loss, which resulted in Becky claiming an ABIL of $35,000.

Becky also had the following capital transactions:

Capital gain on sale of public shares in 2016 ...............................$15,000
Capital loss on sale of land in 2017 .............................................($28,000)
Capital gain on sale of building in 2019 .......................................$53,000
Capital loss on sale of public shares in 2019 ..............................($44,000)

Becky has also earned regular rental income (losses) in prior years, as follows:

2016 ...............................$8,800
2017 .............................($15,000)
2018 ...............................($5,000)
2019 ...............................$9,000

Becky is curious what the after-tax impacts of the sale of Beauty & You Ltd. would be. She’s certain that she can claim the lifetime capital gains exemption on the sale of the share, however, she doesn’t want to sell before she knows how much she will get, after-tax. Becky wants to utilize any net capital losses prior to the use of the lifetime capital gains exemption.

Required: 

Determine the amount of after-tax cash available if Becky were to sell her share in Beauty & You Inc.

Answer rating: 100% (QA)

The amount of aftertax cash available to Becky if she were to sell her share in Beauty You ... View the full answer