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Tax - Essay Example

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In other words, it is the gain that an individual makes which is taxed but not all the amount of money one receives (Grubel & Fraser Institute…
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Download file to see previous pages ng that some assets are tax free and if one’s gains in a year become less than his or her tax-free allowance, the person is not required to pay the capital gains tax. The paper analyzes aspects of the capital gains tax based on Susan’s case.
Susan’s mode of shares’ disposal will determine whether she will pay the capital gains tax or not. If she can manage to evade the tax, it will be for the good of the company. There are instances that one can dispose of assets in a tax free way. Disposing assets can be done through selling it, giving the asset away as a gift, swapping the asset for another one and getting compensation for the asset may be when it gets destroyed or lost. It is well recorded that it could not be possible for transferring the shares to her son. This is because there were strains between her son and her. Similarly, the son did not have material funds (Cordes 2005, p.5).
These two instances make it difficult for Susan to dispose the shares with immediate effect. This is because she feels the ownership of the company should remain in the family. The only available way of disposing the shares immediately was selling the shares to an investor. It is well recorded that she had been approached by an investor. If she decides to sell the shares at this time she will have to pay capital gains tax (Thomas 2004, p.10).  This is because sale of shares is in the docket of disposal way that is liable of being paid the capital gains tax. The best time for Susan to dispose the shares is not yet and the best person to dispose to is her son since the company will remain fully owned by the family and the disposal will take place tax free.
Sale of assets like shares and real estate is the most common manner in which an individual capital loss or capital gain. The capital gains tax is also applicable to the intangible assets like business goodwill. Disposal of shares at a later date can be advantageous than selling them now. According to the 2014 ...Download file to see next pagesRead More
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