Myron Cohen owns a retail store that he is currently operating as a proprietorship. In transferring the assets of this business to a corporation under the provisions of ITA 85(1), the elected value for the depreciable asset swill be more than their UCC but less than their capital cost. This will result in:
A)a capital gain.
B)a terminal loss.
C)recapture of CCA.
D)a capital loss and recapture of CCA.

Question

Quizplus · Accepted Answer

Recapture of CCA occurs when the elected value (selling price for tax purposes) of depreciable assets transferred to a corporation is more than their Undepreciated Capital Cost (UCC) but less than their original capital cost. This results in the previously claimed Capital Cost Allowance (CCA) being "recaptured" or added back into income.

Myron Cohen Owns a Retail Store That He Is Currently