State the tax implications for mad about wraps inc

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Reference no: EM13662849

Mad about Wraps Inc., a company owned by Martha Mod, has been operating two locations in British Columbia since 1994. Its fiscal period ends December 31.

In 2014, the company bought four more locations and, in addition to paying for other assets, paid for goodwill as follows:

Location

Goodwill purchased

Vancouver

$   90,000

Burnaby

20,000

Surrey

10,000

Kelowna

    10,000

Total

$ 130,000

Mad About Wraps Inc. sold the two original locations and received the following amounts for goodwill:

Location

Selling price

Victoria

$ 35,000

Delta

  10,000

Total

$ 45,000

The balance in the cumulative eligible capital account at the end of 2011 was $20,000 after the deduction allowed under paragraph 20(1)(b). There were no additions or dispositions of ECP in 2012 or 2013.

The maximum deduction allowable under paragraph 20(1)(b) was claimed each year.

Required

State the tax implications for Mad About Wraps Inc. with respect to the goodwill in the 2014 taxation year. Show all your calculations and round all amounts to the nearest dollar.

Reference no: EM13662849

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