Determine fred net capital gain for the current year

Assignment Help Taxation
Reference no: EM131213239 , Length: word count:2000

Taxation, Theory, Practice & Law ASSIGNMENT-

Case study 1: Capital Gains Tax

Fred is a resident who signed a contract to sell his holiday home in the Blue Mountains in August last year. The sale was settled in February this year when Fred received $800,000 from the purchaser. Fred incurred legal fees of $1100 (Inclusive of GST) and real estate agent's commission of $9,900 (Inclusive of GST) in relation to the sale. Fred purchased the holiday home in March 1987 for $100,000 and paid $2,000in stamp duty on the transfer and $1000 in legal fees. In January 1990, Fred engaged a builder to build a garage on the property for $20,000.

Calculate Fred's net capital gain for the current year. Assume he also has a net capital loss from last year of $10,000 arising from the sale of shares.

Would your answer be different if the loss arose from the sale of an antique vase?

Case study 2: Fringe Benefits Tax

Periwinkle Pty Ltd (Periwinkle) is a bathtub manufacturer which sells bathtubs directly to the public. On 1 May 2015, Periwinkle provided one of its employees, Emma, with a car as Emma does a lot of travelling for work purposes. However, Emma's usage of the car is not restricted to work only. Periwinkle purchased the car on that date for $33,000 (including GST).

For the period 1 May 2015 to 31 March 2016, Emma travelled 10,000 kilometres in the car and incurred expenses of $550 (including GST) on minor repairs that have been reimbursed by Periwinkle. The car was not used for 10 days when Emma was interstate and the car was parked at the airport and for another five days when the car was scheduled for annual repairs.

On 1 September 2015, Periwinkle provided Emma with a loan of $500,000 at an interest rate of 4.45%. Emma used $450,000 of the loan to purchase a holiday home and lent the remaining $50,000 to her husband (interest free) to purchase shares in Telstra. Interest on a loan to purchase private assets is not deductible while interest on a loan to purchase income-producing assets is deductible.

During the year, Emma purchased a bathtub manufactured by Periwinkle for $1,300. The bathtub only cost Periwinkle $700 to manufacture and is sold to the general public for $2,600.

(a) Advise Periwinkle of its FBT consequences arising out of the above information, including calculation of any FBT liability, for the year ending 31 March 2016. You may assume that Periwinkle would be entitled to input tax credits in relation to any GST inclusive acquisitions.

(b) How would your answer to (a) differ if Emma used the $50,000 to purchase the shares herself, instead of lending it to her husband?

Reference no: EM131213239

Questions Cloud

Write a blog on an environmental issue : Pick an environmental issue.- and write a blog on that topic.- post a high quality publically viewable document as well as making comments on other blog posts.
How do nike customers make two times more than sketchers : Describe the demographics, behavioral, psychological, and preferences of the "Sneakerhead" target audience. Explain the value of tracking each pair purchased and analyzing the data of a collection.
Calculate and plot the load voltage and current : Application: Inductively loaded transmission line. A long lossless transmission line with characteristic impedance of 500 is terminated with a μH inductor. The line is 10 km long and the speed of propagation on the line is c/3. At t = 0, a 100-V m..
Reflect the taxi market in victoria : To what extent does the monopolistic competition model accurately reflect the taxi market in victoria?
Determine fred net capital gain for the current year : HI6028 Taxation, Theory, Practice & Law ASSIGNMENT. Fred is a resident who signed a contract to sell his holiday home in the Blue Mountains in August last year. Calculate Fred's net capital gain for the current year. Assume he also has a net capital..
Determine application that you believe would be least useful : Among the applications that we explored in this course, choose the one that you believe to be the most useful to you and explain why you believe that to be the case. Next, determine the application that you believe would be the least useful to you..
Residents of beverly hills gain prestige : Some goods are bought largely because they have ‘snob appeal.' For example, the residents of Beverly Hills gain prestige by buying expensive items. In fact, they won't buy some items unless they are expensive.
Inferences about the parameters in the model : 1. This question is about using our model of rational choice "backwards": to make inferences about the parameters in the model from observed choices.Alice always maximizes her utility subject to her budget constraint.
In what ways did invaders influence indian culture : Describe at least three works of early Chinese art; how do these pieces reflect Chinese culture and values? Where did Indian culture originate? In what ways did invaders influence this culture?

Reviews

Write a Review

 

Taxation Questions & Answers

  Calculate the corporation current e&p after dividend

Calculate Sigma’s and Brian’s 2013 taxable income and total tax liability, as well as their combined tax liability. Also, calculate the corporation’s current E&P after dividend distribution.

  What is the dollar effect of the year-end bad debt

What is the dollar effect of the year-end bad debt adjustment on the before-tax income?

  Describe how the underpayment penalty is calculated

Describe how underpayment penalty is calculated. What determines if a taxpayer is required to file a tax return? If a taxpayer is not required to file a tax return, does this mean that the taxpayer should not file a tax return?

  How as a tax analyst you see this program

In addition, you should discuss the 401k limits and special treatment for highly compensated employees. Prepare a response (750-1,000) words documenting how, as a tax analyst, you see this program, and note any tax implications related to the prog..

  Evaluate what is tax effect fir brian

Evaluate what is tax effect fir Brian and what will be basis of each of four batches of new stock?

  What is projected after-tax operating profit for first year

What is the projected after-tax operating profit for Year 1? What is the after-tax break-even point in units for Year 1? What is the sales level in dollars required to equal Year 1 after-tax operating profit?

  Prepare an income tax return for the frosts for 2013

Prepare an income tax return for the Frosts for 2013 - examine the bullets on requirements to add that may pertain to these paragraphs.

  What is the exchange rate of the swedish krona

Suppose a Swedish krona is selling for $0.1121 and a Maltan lira is selling for $2.7878. What is the exchange rate (cross rate) of the Swedish krona to the Maltan lira?

  Compare the percentage changes calculated

What is the value of the business' sales revenue for the current and previous years? Calculate the percentage change in sales revenue.

  Evaluate the amount of taxes paid in country

Evaluate the amount of taxes paid in Country

  Calculation of fbt liability for the year ending

At the end of the year ABC hosted a dinner at a local Thai restaurant for all 20 employees and their partners. The total cost of the dinner was $6,600 including GST. Advise ABC of its FBT consequences arising out of the above information, includin..

  What will be the after-tax cost of the consulting firm

The consulting firm's fee will be $100,000. What will be the after-tax cost of the consulting firm's fee if Stoffer's tax rate is 30%?

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd