You have been asked to compute the capital dividend account of Granatstein Ltd., a…

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You have been asked to compute the capital dividend account of Granatstein Ltd., a Canadian-controlled private corporation incorporated in 1986. You have reviewed the tax returns of the corporation for the period January 1, 1986 to December 31, 2008 and made the following notes: 1987 Disposed of bonds resulting in a capital gain of $10,000. 1989 Received taxable dividend of $2,000 and capital dividend of $5,000. 1990 Disposed of shares resulting in a capital loss of $4,000. 1992 Disposed of equipment resulting in a capital gain of $6,000 and recapture of $3,000. 1994 Eligible capital property was purchased for $40,000. 1995 Sold vacant land and reported capital gain of $100,000. 1998 1995 capital gain of sale of vacant land was reassessed by the CRA as income. Granatstein Limited did not fight the reassessment. 2001 Sold shares resulting in a capital gain of $20,000. 2003 Received life insurance proceeds of $100,000 on a life insurance policy on the life of the company president purchased in 1995. As at January 1, 2003, the policy had an adjusted cost basis of $20,000. 2004 Paid capital dividends of $50,000. 2007 Sold a customer list for $100,000. The company s cumulative eligible capital balance at the time of the sale was $25,000. 2008 Sold shares resulting in a capital gain of $37,500. REQUIRED Compute the balance in Granatstein Ltd. s capital dividend account at the end of the 2008 taxation year. Show all calculations and explain why you omitte

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