Braken Ltd. was incorporated in 2009 and, since that time, it has been a Canadian-controlled private company. Between the date of its corporation and December 13, 2020, it has had the following transactions that relate to the Company's capital dividend account.

 

• In 2010, the Company sold a capital asset with an adjusted cost base of $73,600 for proceeds of $114,200.

• In 2013, the Company received a capital dividend of $42,100.

• In 2015, the Company paid a capital dividend of $23,100. The required election was made.

• In 2016, the Company sold two parcels of land. The first parcel of land, which had an adjusted cost base of $123,400, was sold for $176,200. The second parcel of land, which had an adjusted cost base of $220,400, was sold for $198,600.

• In 2017, the Company received life insurance proceeds, net of the adjusted cost base of the policy, in the amount of $131,600.

• Early in 2020, Braken purchased an unlimited life franchise at a cost of $180,000. While Braken intended to operate this franchise as part of its overall business operations, the Company received an unsolicited offer to purchase this franchise for $240,000.

• In 2020, the Company paid a capital dividend of $45,200. The required election was made.

 

Required: Determine the balance in the Company's capital dividend account as of December 31, 2020. Provide a separate calculation of the income inclusion resulting from the sale of the franchise.

Answer rating: 100% (QA)

Solution The capital dividend ... View the full answer