Deer Inc. is a Canadian Corporation and has afiscal year end of December 31. Thecorporation currently has the followingbalances:a) Net-capital loss carryovers of $80,000b) Non-capital loss carryovers of $120,000c) A depreciable property with the fair marketvalue (ÉMV) of $80,000, undepreciatedcapital cost (UCC) of the property $90,000,Adjusted Cost Base (ACB) of $100,000.On February 01, 2021, all the shares of DeerInc. were purchased by Lion Inc., an unrelatedCanadian corporation, conducting a similarbusiness.Required:Explain the tax implications for Deer Inc. as aresult of the acquisition of all shares by LionInc.

When one company acquires entire business of another entity or major portion of the business is…

Answered: Explain the tax implications for Deer…

Business

Accounting

Explain the tax implications for Deer Inc. as a result of the acquisition of all shares by Lion Inc.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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Concept explainers

Fringe Benefit Tax

Fringe benefits are in addition to the compensation that companies give to their employees. It is an additional benefit above the stated salary. It helps to keep the employees of the firm motivated as sometimes the only salary is not enough to retain the quality employees of the firm. There are different types of fringe benefits. Fringe benefits are given in both private as well as public enterprises.

Question

Deer Inc. is a Canadian Corporation and has a
fiscal year end of December 31. The
corporation currently has the following
balances:
a) Net-capital loss carryovers of $80,000
b) Non-capital loss carryovers of $120,000
c) A depreciable property with the fair market
value (ÉMV) of $80,000, undepreciated
capital cost (UCC) of the property $90,000,
Adjusted Cost Base (ACB) of $100,000.
On February 01, 2021, all the shares of Deer
Inc. were purchased by Lion Inc., an unrelated
Canadian corporation, conducting a similar
business.
Required:
Explain the tax implications for Deer Inc. as a
result of the acquisition of all shares by Lion
Inc.

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