Green CoAnd Blue Co

question 9

Essay

Green Co.and Blue Co.are equal partners in Turtle Books.Turtle Books had a net income for tax purposes this year of $300,000, before deducting capital cost allowance.
Green Co.is a CCPC owned by Drew Alvarez.Green's net income for tax purposes is $200,000.
Blue Co.is a CCPC owned by Quinn Kano.Blue Co.has suffered net losses the past two years.This year Blue Co.had a loss of $150,000, and the company has non-capital losses of $200,000 which will expire in two years.
The capital cost allowance for Turtle Books this year is $72,000.
Required:
Based solely on the facts provided:
A.Calculate the partnership net income for tax purposes that Drew would likely prefer to use, and explain why.
B.Calculate the partnership net income for tax purposes that Quinn would likely prefer to use, and explain why.

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Definitions:

Expressed Agency

A legal relationship where an agent is explicitly granted the authority by the principal to act on their behalf.

Apparent Agency

The legal doctrine that allows a third party to hold a principal liable for the acts of an agent, where the principal has given the appearance of agency.

Ratification

The process by which someone gives formal consent or approval to something, often a legal or contractual agreement.

Faithless Servant Doctrine

A legal principle that allows employers to recover compensation paid to an employee who has acted disloyally or in breach of contract.