Question

Mr D is a dentist having his own clinic in Alsancak. He calculated his gross independent personal service income as 170.000 TL in 2019. The deductible expenses incurred for that activity amounted to 65.000 TL.

Mr. D has also two flats in Karşıyaka. The rental income on those flats were 40.000 TL in 2019.

Mr. D had another flat in Bornova which he bought it in January 2016 and he disposed it in December 2019. The net gain on his disposal was calculated as 20.000 TL.

The paid witholding tax is 3.400 TL

He chooses lump-sum expense method for his rental income.

Exclusion amount on capital gain is 14.800 TL for 2019

Use the income tax scehule for 2019 from the slides.

  Required: Calculate Mr D’s personal income tax liability for 2019. (10 points)

Answer 1

Calculation of Mr D’s personal income tax liability for 2019
		(CCY: Turkish Ira (TL)
Income from Independent Professional Services
Gross independent personal service income	170,000.00
Less: Deductible expenses incurred for that activity	-65,000.00
		105,000.00
Income from Immovable Property
Rental Income from flats in Karsiyaka	40,000.00
Less: Lump sum deduction (25% of Rental income) = 25% of 40,000	(10,000.00)
		30,000.00
Capital Gains
Net gain on his disposal of flat in Bornova which he bought it in January 2016 (fully taxable as sale is made withn 5 years of purchase)	20,000.00
Less: Exclusion Amount on capital Gains	(14,800.00)
		5,200.00
	Net Taxable Income	140,200.00
Tax on above
0- 18000: 15%	2,700.00
18000-40000: 2700 + 20% in excess	4,400.00
40000-148000:7100 + 27% in excess	2,106.00
	Total Tax liability	9,206.00
	Less: Tax Withhlding	3,400.00
	Tax Payable	5,806.00