StudentShare solutions
Triangle menu

Capital Gains Tax Liability - Case Study Example

Not dowloaded yet

Extract of sample
Capital Gains Tax Liability

This is not only valuable because you singularly own the property, but also because that gives you added equity and financial credibility in addition to other benefits, such as the fact that being a homeowner brings with it many perks.
The capital gains that will be have to paid on the apartment is $150,000 since that is the money that was made off the sale. This number is computed by subtracting the original list price ($650,000) from the sale price ($800,000). Additionally, capital gains tax must be paid on the house. The main residence exemption may apply, but you as the client would have to ask a capital gains lawyer if this would apply to you. You were supposed to have given two years' notice within having a combination of residencies.1
Since Angelina owned 10,000 shares in Rio Tinto, and they are now valued at $40 and not the original selling price of $29, she will have to pay capital gains taxes for stock value. Her capital gains tax will be a certain percentage of $11,000 that she made after the BHP takeover of Rio Tinto. Rollover consequences may be that Angelina will have to pay some sort of fine for rolling over her assets.
For Angelina's partnership with Lena, she will have to pay a certain percentage of capital gains taxes of $75,000. ...
[However, w]hile the roll over allows you to defer a capital gain to a later income year, other CGT small business concessions may exempt or reduce your capital gain" which are the consequences.2
The law states, "If your business has owned an asset for 15years and you are aged 55years or over and are retiring, or if you are permanently incapacitated, you won't have an assessable capital gain when you sell the asset."3 Therefore, since Angelina is only 52 she cannot get this break.
However, the law also states, "A capital gain from the sale of a business asset will be exempt up to a lifetime limit of $500,000. If you are under 55years of age, the exempt amount must be paid into a complying superannuation fund or a retirement savings account to obtain the exemption."4 This would apply to Angelina, so she could put any capital gains tax into the specified type of retirement account.
Angelina most likely is able to receive the 50% small business reduction. This means that she can multiply half of her profit, and subtract it from the capital gain and only have to pay that amount. Angelina and Sean would have to meet certain requirements in order to get a small business exemption. Some further research would have to be done in order to see if they met those requirements.
According to Active Asset Reduction law, "There are other CGT small business concessions, in addition to this concession, that may apply to reduce your capital gain. You can apply as many concessions as you are entitled to until the capital gain is reduced to nil. There are rules about the order you apply the CGTconcessions...."5
With regard to Angelina and Lena's business, most likely the trading stock could be rolled over since it is such ...Show more

Summary

I have been working in the Tax Services Division of DV Chartered Accountants for two years. It was brought to my attention that you needed some counsel on some rather important matters and I am here to now assist you. I took some notes regarding the meeting which I wish to share with you.
Author : melissa69
Capital Gains Tax Liability essay example
Read Text Preview
Save Your Time for More Important Things
Let us write or edit the case study on your topic
"Capital Gains Tax Liability"
with a personal 20% discount.
Grab the best paper

Related Essays

FINANCE AND ACCOUNTING
Wilma will not be liable for her uncle’s debts, therefore the capital gains tax will apply on the difference between the fair value of the house and the proceeds received from the sale of the house if she decides to sell it.
3 pages (750 words) Case Study
Assignment 1 (Mineral Resource Rent Tax (MRRT)
It was expected by the Australia’s Future tax System Review that the new taxation charges would help in the improvement of the taxation system prevailing in the country and thus also help the mining industries to revive. RSPT is a neutral tax that will set a new benchmark for the resource taxation.
10 pages (2500 words) Case Study
Taxation Master Case Study
Tax year means that only those incomes obtained from employment from 6 April in one year to 3 April the next year shall be the basis in computing your income tax thereafter. For example, in computing your income tax liability from employment for 2008/2009, we shall consider your income received from 6 April 2008 to 3 April 2009.
20 pages (5000 words) Case Study
Advanced taxation
The fact that he has not made any will so far will make his successors liable for inheritance tax in the event of his death.Present taxation system charges Inheritance Tax on any estate worth over 300,000
10 pages (2500 words) Case Study
The calculations for the capital gains tax
Major changes have been brought in the budget for the year 2008 in respect of the capital gains tax. The indexation allowance and taper relief which have so far been allowed are withdrawn and in that place a flat rate of 18 percent of the chargeable gains has been introduced.
10 pages (2500 words) Case Study
HALL v. UNITED STATES ANALYSIS
The content of the case is relevant to the scope of this course. It elaborates on chapter 12 of the U.S laws on Internal Revenue Code (IRC) and the guidelines followed upon declaration of one’s bankruptcy and forced to sell his or her
3 pages (750 words) Case Study
Tax planning clients
It is important to note that the main purpose of this provision is to reduce the individual tax liability. With the availability of this account, the couple are would set aside a
4 pages (1000 words) Case Study
Liam and Irene live at 8 MacDuff Lane, Elgin. They have two children, Stuart and Tracy, aged 8 and 4 years respectivel
s because the capital gain accrued from sale of residential houses does not attract capital gain taxation due to the private residence relief residence (CIOT, 2014). The moving date will determine the cost the couple will incur in servicing the current mortgage rate and
10 pages (2500 words) Case Study
Taxation Law and Practice A
The general method of calculating the tax liability for the company involves finding out what the assessable income for the year is and subtracting the deductions applicable in order to find out the taxable amount.MM company will have to find out if the amount paid to
8 pages (2000 words) Case Study
Liability & Negligence
The seller or distributer of the aircraft would also have been liable for the pilot’s accident. Lastly, the insurer of the aircraft can also be found liable for the pilot’s
3 pages (750 words) Case Study
Get a custom paper written
by a pro under your requirements!
Win a special DISCOUNT!
Put in your e-mail and click the button with your lucky finger
Your email
YOUR PRIZE:
Apply my DISCOUNT
Comments (0)
Rate this paper:
Thank you! Your comment has been sent and will be posted after moderation