Question

In: Accounting

Question 1 Mr khan got some cash worth $ 500,000 and collectibles in inheritance, and his...

Question 1

Mr khan got some cash worth $ 500,000 and collectibles in inheritance, and his ancestors died on November 2003. The collectibles were acquired by the ancestors before September 1985 at a cost of $ 20,000.

And these collectibles were worth $ 100,000 on the date of death.

From the inherited amount, Mr Khan bought some shares in BHP for$ 50,000. And he bought a house in Burwood for $ 400,000 in 2003, also he bought a painting for $ 20,000 on the same date.

During the current year the painting was stolen and there was no insurance on the painting. He sold the shares in BHP (2000 shares @ $50, commission $1/share)

In 2015 Mr khan sold his property in Burwood for $ 700,000 and started living with his parents. Mr khan before moving into his parent’s house he was living in his Burwood property.

In 2015 he sold a diamond ring which was inherited from his ancestors for $100,000. This item was purchased for $ 50,000 in 18^th century. The market value of this diamond on the date of death was $ 20,000.

CALCULATE THE CAPITAL GAINS TAX OF MR KHAN. (Australian tax law)

Expert Solution

when a deceased person acquired their asset before sept 1985 the first element of your cost base is market value of the asset on the date the person died hence, cost of collectibles is $100000. If asset is collectable & personal use , it continues to be one when you receive it .

Total amount received in inheritance is Cash - 500000$+ collectibles $100000+ daimond ring $20000 . It shall be taxable when the amount is further disposed off.

Further this amount is used to purchase shares , painting & house

No capital gain/ loss on stolen painting and Capital gain tax is exempt on dwelling houses as Mr. khan has used the property for residential purpose.

Calculation of capital gain tax

Shares Sold (2000*50) 100000

-Commission 2000

Net Shares selling price 98000

-Cost of shares 50000

Gain on sale of shares 48000

Sale of daimond 100000

- Market value of daimond 20000

Gain on sale of daimond 80000

Total Capital gain (48000+80000) 128000

As the assets are kept for more than 1 year capital gain tax is first discounted by 50% for individuals taxpayers i.e. 128000*.5 = 64000

ekkarill92 answered 1 year ago

Question 5: (A)Mr. Amir planning to start his own business, his suggested him to know some...

Question 5: (A)Mr. Amir planning to start his own business, his suggested him to know some of the basic knowledge about like accounting ,economics, finance, marketing etc.. One of the aspects is accounting. Why business men have to know about Accounting? Justify your answer. (5 Marks, Word Limit 200-300) (B) Ms.Iman joins an Information technology firm as a system analyst. She has to work in very close coordination with all the departmental heads in the firm, Ms.Iman realizes that each...

Ash purchased $500,000 worth of 5-year equipment for use in his business. What is the present...

Ash purchased $500,000 worth of 5-year equipment for use in his business. What is the present value of the savings under bonus depreciation (compared to MACRS depreciation)? Ash’s marginal tax rate in all years is 40 percent and his cost of capital is estimated to be 10 percent. How would Ash analyze whether this is a wise investment? This is all I have no more information available.

Mr. Smith is contemplating retirement. He has just celebrated his 50 birthday and his net worth...

Mr. Smith is contemplating retirement. He has just celebrated his 50 birthday and his net worth is $2.5 million. He hopes that after retirement he can maintain a lifestyle that costs him $110000 per year in today's dollars (i.e., real dollars, inflation adjusted). For simplicity, assume that all expenses occur at the end of each year; the first expense of $110000 will happen one year from now. If he retires, he will invest all his net worth in government bonds...

QUESTION 1 A) Mr Baxter is planning on travelling with his family to the Soccer World...

QUESTION 1 A) Mr Baxter is planning on travelling with his family to the Soccer World Cup semifinals and final in North America in six years time and would like to start saving today towards the cost of the trip. Victory Ltd, an international sports tour operator has estimated that the cost for him and his family in six years time would amount to R 350 000 in total. This would include the cost of the flights, accommodation and stadium...

1. Some traits are not transmitted via Mendelian inheritance. Describe three forms of inheritance that do...

1. Some traits are not transmitted via Mendelian inheritance. Describe three forms of inheritance that do not follow Mendelian inheritance or laws. Hint: These are alternative to dominance and recessivness.

1) Eight years from now, you will be inheriting $100,000. What is this inheritance worth to...

1) Eight years from now, you will be inheriting $100,000. What is this inheritance worth to you today if you can earn 7.25 percent interest, compounded monthly? A) $50,947.00 B) $51,226.00 C) $52,150.00 D) $59,177.00 E) $56,087.63 2. You have been told that you need $32,000 today for each $120,000 you want when you retire 28 years from now. What rate of interest was used in the present value computation? Assume interest is compounded annually. A) 4.23 percent B) 4.53...

Question 1. Determine the future worth in year 10 of a cash flow series that starts...

Question 1. Determine the future worth in year 10 of a cash flow series that starts in year 0 (today) at $25,000 and decreases by 6% per year (through year 10). Use an interest rate of 6%. Question 2. Person opens a savings account today. In year 1, she deposited $5,000. She made no deposits in year 2 and 3 and then deposit $2,000 each for years 4 trough 6. Given an interest rate of 4%, how much would she...

Mr. Wilson’s house as purchased fir $280,000 five years ago and worth $300,000 now, and his...

Mr. Wilson’s house as purchased fir $280,000 five years ago and worth $300,000 now, and his mortgage was $260,000 and amortized over 25 years, at four percent interest, compounded semi-annuallu, what is his equity in the house now? ( To the nearest $1000)(show you calculation - You must assume monthly mortgage payment frequency; hint, and use amortization schedule)

Lance contributed investment property worth $500,000, purchased three years ago for $200,000 cash, to Cloud Peak...

Lance contributed investment property worth $500,000, purchased three years ago for $200,000 cash, to Cloud Peak LLC in exchange for an 85 percent profits and capital interest in the LLC. Cloud Peak owes $300,000 to its suppliers but has no other debts. a. What is Lance’s tax basis in his LLC interest? b. What is Lance’s holding period in his interest? c. What is Cloud Peak’s basis in the contributed property? d. What is Cloud Peak’s holding period in the...

Mr. Dawson is considering incorporating a company and transferring some of his assets into this company...

Mr. Dawson is considering incorporating a company and transferring some of his assets into this company in order to take advantage of the possibility of some tax savings and deferral possibilities. Which of the following situations would provide the largest tax savings for Mr. Dawson? A. Incorporating a CCPC earning only Active Business Income eligible for the small business deduction. B. Incorporating a CCPC earning only dividend income. C. Incorporating a CCPC earning only investment income. D. Incorporating a CCPC...