Question

QUESTION 2 - Taryn would like to open a new business as an interior designer, to funds her ambition she sold some of the following assets:

1. Antique Painting that was given to Taryn by her father 5 years ago. Taryn’s father bought it on 20 August 1984 for $2,500. Taryn sold it on 1’st June 2020 for $25,000

2. Taryn sold her car (Toyota Corolla) for the amount of $12,000 on 20’th May 2020, she bought on 1’st January 2015 for the amount of $20,000

3. Taryn sold her Harry Potter’s collection for the amount of $1,500 on 4’th January 2020, she bought it second hand on 10’th October 2018 for $350.

4. Taryn sold her gold necklace for $2,000 on 20’th March 2020, she bought it for $1,200 on 8’th August 2018 5. Taryn sold a sculpture for $6,000 on 1 January 2020, she bought it on December 1994 for $1,500

Advise the Capital Gain Tax Consequences for the above transactions

Answer 1

Below are the Capital Gain Tax consequences for the above transactions:-

1) Painting are considered as Capital Assets, so capital gain will attract and capital gain as well.

If any movebale property is held for 3 or more than years, then it'll attract Long Term Capital Gain.

So in that case painting is held for that 3 years, so it will attract Long Term capital gain tax.

2) If any car is used for personal purposes, so it is not a Capital Asset and capital gain will not applicable.

In that case, Taryn sold her personal car, so capital gain will not applicable.

3) If any moveable property is held for 3 or more years, than it will considered as Long Term Capital Asset otherwise it will be considered as Short Term Capital Asset.

In that case, Tayrn sold her Harry Potter collection's on 4th January 2020 which she bought it on 10th October 2018.

She held these collection less than 3 years, so it considered as Short Term Capital Asset and Short Term Capital Gai will applicable.

4) Assest help for personal use like Jwellery will be considered as Captial Asset and Capital Gain will be applicable.

In that case, Tayrn sold her Gold necklace on 20th March 2020 which she bought it on 8th August 2018. It means she held it less than 3 years, so Short Term Capital Gain will applicable on sell of it.

Also Tayrn sold a sculpture which she held it for more than 3 years, so in that case Long Term Capital Gain Tax shall applicable.