Understanding Capital Gains on Depreciable Property: Tax

Exercise Problem 5.10 - Capital Gains on Depreciable Property, p.284 On January 1 of the current year, Vaughn Ltd. has a class 8 balance of $275,000. During the current year, property with a capital cost of $18,000 is sold for $23,000. There are no other dispositions during the year and there are numerous properties remaining in the class. What are the income tax consequences of this disposition? UCC, January 1, 2022275,000 Deduct lesser of (1) POD = 23,000 (2) CC = 18,000(18,000) CCA Balance 2022257,000 CCA 2022 (20%)(257,000)51,400 UCC, January 1, 2023205,500 *capital gain of (1/2)(23,000 - 18,000) = 2,500