Kvetch Ltd. has operated one business with a December 31 year-end since its incorporation in 2018. It
Question:
Kvetch Ltd. has operated one business with a December 31 year-end since its incorporation in 2018. It has made the following transactions:
August 2019 — incurred incorporation costs of $2,500
May 2020 — purchased a licence with an indefinite life for $11,755
June 2021 — purchased goodwill for $80,000
August 2023 — purchased a franchise with an indefinite life for $120,000
October 2025 — sold the licence for $50,000 purchased in May 2020
June 2026 — sold the franchise for $200,000 purchased in August 2023
Required:
Calculate the effect of the above transactions on income from business, assuming that the maximum write-off is taken by the corporation in all of the years indicated. Assume that the transaction was an arm’s length transaction. Please round off to the nearest dollar when you do your calculations.
Canadian Income Taxation planning and decision making
ISBN: 9781259094330
17th edition 2014-2015 version
Authors: Joan Kitunen, William Buckwold