Hugo owns a farm. Both Hugo and his son work on the farm raising sheep. On February 16, 2017 Hugo sold a shearing machine to his son for $5,000.

Hugo owns a farm. Both Hugo and his son work on the farm raising sheep. On February
16, 2017 Hugo sold a shearing machine to his son for $5,000. The original cost of the machine
was $10,000, the UCC is $8,000 and the fair market value is $5,000. The machine
was the last asset in its CCA class. On September 1, 2017, his son took the machine to an
auction in another province where an enthusiast bidder paid $6,000 for it. The tax consequences
are:
A. Hugo has a terminal loss of $3,000 and his son has a taxable capital gain of $500.
B. Hugo has a terminal loss of $3,000 and his son has recapture of CCA of $1,000.
C. Hugo has a terminal loss of $2,000 and his son has no tax consequences.
D. Hugo has no tax consequences and his son has a terminal loss of $2,000.
 
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