Problem: CCA - Ranger Incorporated
Ranger Inc., a Canadian public company with a December 31st year end has the following balances in the CCA classes for its assets at January 1, 2005.
Class 1 (4%) - Building $1,150,000
Class 43 (30%) - Manufacturing Equipment 217,000
Class 8 (20%) - Office Furniture and Equipment 155,000
Class 10 (30%) - Delivery trucks 67,000
During the year, Ranger Inc. decided to significantly alter its business model. As a result, the following occurred:
1. Ranger Inc. sold its building and entered into a lease for a new office building. The building, which originally cost $1,300,000, was sold for $1,400,000.
2. All manufacturing would be subcontracted out. Accordingly, the manufacturing equipment was sold for $180,000. The equipment was originally purchased for $250,000.
3. Additional office furniture was purchased at a cost of $27,000. In addition, office furniture was sold for $35,000 (original cost $22,000).
4. Ranger sold one of its trucks for $20,000 (original cost $25,000) and purchased a used truck for $8,000.
Required:
Calculate the maximum CCA claim for 2005. Identify any other tax issues arising from the above transactions.