Part D 10 marks - 16 minutes On June 1, 2019, Stella d' Oro Inc. (a...

 

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Part D 10 marks - 16 minutes On June 1, 2019, Stella d' Oro Inc. (a well-established, profitable Italian shoe manufacturing business) acquired all the shares of Chef Nicastro Ltd. (CNL), a company that manufactures and sells fresh pasta with a December 31 year-end. CNL's business had been very good until the beginning of 2017 when a local Italian newspaper discovered that Mr. Nicastro's real name was Stanley Kowalski and that he had never been to Italy or even to cooking school. Demand for CNL's products immediately fell off, resulting in a net business loss for 2017 of $67,000, followed by yet another business loss of $129,000 in 2018. These non-capital losses were unutilized as at December 31, 2018. In addition, during 2018, CNL was forced to sell some of its business assets in order to meet his cash flow needs. This resulted in net capital loss of $48,000 [(1/2) ($96,000)]. These net capital losses are also unused as at December 31, 2018. For the period January 1, 2019 through May 31, 2019, CNL's accountant determined that there was a net business loss of $79,000. Also, as at May 31, 2019, CNL's assets had the following values: Asset Investments in BCE Common Stock Land Building Equipment Cost UCC 32,000 85,000 427,000 285,000 N/A N/A 120,000 60,000 Fair Market Value 28,000 235,000 327,000 50,000 Required: Part 1. Calculate CNL's taxable income or non-capital loss for the short deemed period ending May 31, 2019. This computation must reflect all of the deemed tax consequences that occurred as the result of the acquisition of control, as well as any election(s) claimed at amounts that that would eliminate losses that otherwise would be lost or restricted. These elections must not cause the reporting any additional taxable income. 5 marks Part 2.. Prepare a schedule that will show the net capital loss and the non-capital loss carry forwards balances that would exist after the May 31, 2019 acquisition of control. 2 marks Part 3. Advise Stella d'Oro Inc as to the rules regarding the future utilization of the non-capital losses carried forward by CNL after the acquisition. 2 marks Part D 10 marks - 16 minutes On June 1, 2019, Stella d' Oro Inc. (a well-established, profitable Italian shoe manufacturing business) acquired all the shares of Chef Nicastro Ltd. (CNL), a company that manufactures and sells fresh pasta with a December 31 year-end. CNL's business had been very good until the beginning of 2017 when a local Italian newspaper discovered that Mr. Nicastro's real name was Stanley Kowalski and that he had never been to Italy or even to cooking school. Demand for CNL's products immediately fell off, resulting in a net business loss for 2017 of $67,000, followed by yet another business loss of $129,000 in 2018. These non-capital losses were unutilized as at December 31, 2018. In addition, during 2018, CNL was forced to sell some of its business assets in order to meet his cash flow needs. This resulted in net capital loss of $48,000 [(1/2) ($96,000)]. These net capital losses are also unused as at December 31, 2018. For the period January 1, 2019 through May 31, 2019, CNL's accountant determined that there was a net business loss of $79,000. Also, as at May 31, 2019, CNL's assets had the following values: Asset Investments in BCE Common Stock Land Building Equipment Cost UCC 32,000 85,000 427,000 285,000 N/A N/A 120,000 60,000 Fair Market Value 28,000 235,000 327,000 50,000 Required: Part 1. Calculate CNL's taxable income or non-capital loss for the short deemed period ending May 31, 2019. This computation must reflect all of the deemed tax consequences that occurred as the result of the acquisition of control, as well as any election(s) claimed at amounts that that would eliminate losses that otherwise would be lost or restricted. These elections must not cause the reporting any additional taxable income. 5 marks Part 2.. Prepare a schedule that will show the net capital loss and the non-capital loss carry forwards balances that would exist after the May 31, 2019 acquisition of control. 2 marks Part 3. Advise Stella d'Oro Inc as to the rules regarding the future utilization of the non-capital losses carried forward by CNL after the acquisition. 2 marks

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The detailed answer for the above question is provided below The question about the tax implications of an acquisition of control of a company Here is the answer Part 1 CNLS taxable income or noncapit... View the full answer