Modern Ltd.had an unused allowable capital loss of $20,000 during the current fiscal year and an unused business loss of $10,000.Modern Ltd.has a December 31 year-end.Which of the following statements is TRUE?
A)All of the losses will be lost if not used in this fiscal year.
B)The unused allowable capital loss will become a net-capital loss and can be carried back three years and forward indefinitely, and the unused business loss will become a non-capital loss and can be carried back three years and forward twenty years.
C)The unused business loss will become a net-capital loss and can be carried back three years and forward indefinitely, and the unused allowable capital loss will become a non-capital loss and can be carried back three years and forward twenty years.
D)The unused business loss will become a non-capital loss and can be carried back three years and forward indefinitely.

Question

Quizplus · Accepted Answer

The unused allowable capital loss will become a net-capital loss and can be carried back three years and forward indefinitely, and the unused business loss will become a non-capital loss and can be carried back three years and forward twenty years. This is in accordance with the Income Tax Act.