question archive Harper, a CCPC, owns 80% of voting shares of Bazaar, also a CCPC
Harper, a CCPC, owns 80% of voting shares of Bazaar, also a CCPC
Subject:AccountingPrice:2.87 Bought7
Harper, a CCPC, owns 80% of voting shares of Bazaar, also a CCPC. Harper earns ABI and taxable income of $400,000 in the current taxation year. Bazaar earns ABI and taxable income of $200,000 and claims an SBD of $38,000 in the current taxation year. Both Harper and Bazaar have a December 31 year end. Which of the following statements is true?
1) Harper is associated with Bazaar and is entitled to claim an SBD of $57,000.
2) Harper is not associated with Bazaar and is entitled to claim an SBD of $76,000.
3) Harper is associated with Bazaar and not entitled to claim an SBD.
4) Harper is associated with Bazaar and is entitled to claim an SBD of $76,000.
Purchase A New Answer
Custom new solution created by our subject matter experts
GET A QUOTE
Answer Preview
Answer: Harper is associated with Bazaar and is entitled to claim an SBD of $57,000.
As Harper controls Bazaar, the two corporations are associated.
They will share the $500,000 small business limit.
Because Bazaar has claimed $200,000 (38,000/0.19) of the small business limit,
the balance of $300,000 is available to Harper. $300,000 × 19% = $57,000
