Required:

Assuming Quality Rest does not make an election to recognize accrued gains or recapture under paragraph $111(4)($e$)$ of the Income Tax Act:

$1($a$).$ Calculate the business loss for tax purposes for the period January $1,2023$September $30,2023.$

$1($b$).$ State the tax value $($e$.$g$.,$ ACB, UCC$)$ for each of the assets at October $1,2023.$

$1($c$).$ What conditions must be met in order for the non$-$capital losses incurred in the period January $1,2022$ through Sept $30,2023$ to be deductible by Quality Rest in the December $31,2023($or subsequent$)$ taxation years?

$1($d$).$ What is the maximum amount of non$-$capital losses that can be deducted for the year ended December $31,2024?$

$1($e$).$ What is the maximum amount of net capital losses that can be claimed for the year ended December $31,2024?$

$2.$ Assume Michael expects to be able to use Quality Rest$$s losses by amalgamating Quality Rest with another corporation that he owns. What are the implications if Michael elects under ITA $111(4)($e$)$ to recognize capital gains and recapture at September $30,2023?$

Select the asset$($s$)$ eligible for the election:

Ignore your previous choice$($s$)$ and assume that an election can and will be made on land. At what amount of elected proceeds will Michael be able to utilize all expiring losses?

$3.$ Michael is the sole shareholder of two other corporations, Michael Foods Ltd$.$ which operates a food distribution business $($annual profits $$600,000)$ and RelaxCo which operates a retirement home $($annual profits $$200,000).$ Both corporations are located in Ontario. Which one of these two corporations should be amalgamated with Quality Rest in order to save income tax? Explain.Michael Chan purchased $100\%$ of the issued shares of Quality Rest Inc., a Canadian$-$controlled private corporation, which owns and

operates an assisted$-$living retirement home in Ontario. Quality Rest has a December $31$ fiscal year end. The transaction closed on

October $1,2023.$ At that time, the values of certain assets owned by Quality Rest were as follows.

Michael selected December $31,2023$ as the first fiscal year$-$end for Quality Rest after the acquisition. The following is a schedule of

Quality Rest's income and unused losses for the period January $1,2022-$December $31,2024.$