Question

Due to COVID-19 impact, Watson Co becomes insolvent and placed into voluntary liquidation by its directors. Dissolve liquidators have been appointed as the company liquidators. On the winding up of the Watson Co, Dissolve liquidators have started distributions and Paul as ex-shareholder of Watson Co received $7,200 from the liquidators, which was inclusive of $3,000 unfranked dividend pursuant to the provision of Income Tax Assessment Act 1963, section 47(1). This distribution to Paul was from his $4,000 investment in the shares of Watson Co on 2nd February 2019. Required: With reference to relevant provisions of ITAA 97 and ITAA 36, critically analyze the tax consequences

Answer 1

	Answer:
	Transaction price to Product Q based on adjusted market assessment approach
	Product		Market Price	Weight
	P		$ 2,00,000.00	25.00%
	D		$ 2,50,000.00	31.25%
	Q		$ 2,20,000.00	27.50%
	R		$ 1,30,000.00	16.25%
	Total		$ 8,00,000.00
	Total Transaction Price	$ 8,20,000.00
	Weight of Product Q	27.50%
	Transaction price for Product Q	820000 X 27.50% = $ 225500
	Answer is Option A