Nobody downloaded yet

Capital Gains Tax Liability - Case Study Example

Comments (0) Cite this document
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.
Download full paperFile format: .doc, available for editing
GRAB THE BEST PAPER97.7% of users find it useful
Capital Gains Tax Liability
Read TextPreview

Extract of sample "Capital Gains Tax Liability"

Download file to see previous pages 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 ...Download file to see next pagesRead More
Cite this document
  • APA
  • MLA
(“Capital Gains Tax Liability Case Study Example | Topics and Well Written Essays - 1500 words”, n.d.)
Capital Gains Tax Liability Case Study Example | Topics and Well Written Essays - 1500 words. Retrieved from
(Capital Gains Tax Liability Case Study Example | Topics and Well Written Essays - 1500 Words)
Capital Gains Tax Liability Case Study Example | Topics and Well Written Essays - 1500 Words.
“Capital Gains Tax Liability Case Study Example | Topics and Well Written Essays - 1500 Words”, n.d.
  • Cited: 0 times
Comments (0)
Click to create a comment or rate a document

CHECK THESE SAMPLES OF Capital Gains Tax Liability

Tax avoidance,tax evasion,tax mitigiation

...will be taxed will depend on the terms of the taxing statute sought to be applied." 8 Court's Opinion on Tax Avoidance In any case where a predetermined series of transactions contains steps, which are only there for the purpose of avoiding tax, the tax is to be calculated on the effect of the composite transaction as a whole. 9 A scheme would not be effective for tax avoidance purposes if there was a pre-ordained series of transactions and if steps had been inserted which had no commercial purpose apart from the avoidance of a liability to tax. 10 The ruling in the case applies not only...
8 Pages(2000 words)Essay

Capital Gains Tax is an unfair tax and has too many exemptions to be useful and is not consistent with the ideals of Adam Smith

...put forward by Adam Smith. According to canon of equality, the rich should pay more taxes than the poor, or at least, in proportion to their income. Capital gains tax allows many exemptions and allowable deductions and the rich are able to make the most out of them. Further, according to the canon of certainty, the measurement of taxes should be easily understandable and the taxpayer should not be uncertain about the calculation and determination of tax liability. Capital gains tax is very complicated and often tends to confuse the taxpayers a lot....
4 Pages(1000 words)Essay

Stevens gift tax liability for 2013

...Question Part Steven’s gift tax liability for Gifts given: Fur Coat to Allie = $10,000 (less than annual exclusion of $14,000) Car to Bobby = $18,000 = 18000 – 14000 = $4,000 (taxable) Cash to Carla = $20,000 = 20000 – 14000 = $6,000 (taxable) Total gift tax liability = 6000 + 4000 = $10,000 Lifetime gift tax exemption = $5,250,000 Less gift tax due = 5250000 – 10000 = $5,240,000 Steven’s gift tax liability amounts to $10,000; however, this amount is offset by the lifetime gift exemption (Hoffman, Raabe and James 847). In this case, Steven is not subject to any gift taxes in 2013, but...
3 Pages(750 words)Assignment

The Impact Of Capital Gains Tax On Residential Property Investment Performance And Viability In Australia

...on a pro rata basis. This concession has particular application in situations where work requires a temporary or extended relocation. Another situation which may arise is where timing differences between the purchase of a residence and sale of an existing residence may result in a person having two residences. The legislation allows an exemption from CGT for both residences for up to three months, provided the residence being sold was the persons sole or principal place of residence for a continuous three month period during the previous twelve months up to its sale, and during this twelve month period it was not used to produce assessable income. Issues Determining Liability to Capital...
10 Pages(2500 words)Essay

Capital Gains Tax

...Capital Gains Tax The following are the implications under the provisions of the Capital Gains Tax in respect of the proposed sale of the business by Peter: 1. Plant &Equipment: Being a depreciable asset, there are special rules that apply to this class of asset. A depreciating asset is an asset that has a limited effective life and can reasonably be expected to decline in value over the time it is used. Plant and machinery is a depreciable asset used for business purpose. The capital gain or capital loss resulting from a depreciable asset is subject to the taxation only to the extent...
4 Pages(1000 words)Research Paper

The calculations for the capital gains tax

...AF3S11 TAX ASSIGNMENT 2007/08 Case of Mr. Darling Letter addressed to Mr. Darling: Dear Mr. Darling Re: Impact of Budget for the year 2008 on your taxable income We have made a review of the information provided by you on the status of your income and capital gains. For your review we have appended your income tax computation for the years 2007-08 and 2008-09. We write to advise you the following with respect to the applicability of the income tax and capital gains. Capital Gains Tax Major changes have been brought in the budget for the year 2008 in respect of the...
10 Pages(2500 words)Case Study

Evaluation of Capital Gains Tax Proposals for 2008/09

..."Evaluation of Capital Gains Tax Proposals for 2008/09" The art of taxation consists in so plucking the goose as to obtain thelargest possible amount of feathers with the smallest possible amount of hissing. - Jean Baptiste Colbert Taxation can be described as the amount of money a firm or an individual pays to the government to ensure the proper functioning of the nation. The tax is levied on the income a person receives, profits an industry makes etc. Taxes are also imposed on services rendered, the the income acquired from the sale of an investment. The list oon taxable commodities and services depends upon the financial laws of a country. The...
4 Pages(1000 words)Essay

Liability Issues - Limited Liability Company

...liability. In other words when there is a loss, the assets of the entity will be sold and if possible, the assets of the owners will be sold to defray the costs. On the other hand, companies (limited liability companies) have a limited liability and this implies that the owners have a separate economic existence from the company. Kind of Company/Partnership Possible A company is an entity that is registered as a corporate entity usually with a limited liability. It has a separate existence from the owners and it is owned through shares that are a stock of capital which is divided into equal units. Thus, the three friends could define a share...
6 Pages(1500 words)Essay

Capital Gains and Losses

...and losses. In order to realize additional tax benefits, the investor should use tax loss harvesting on a regular basis. Hammer (2013) argues that tax loss harvesting is a useful tool for reducing tax liability. However, she advises that the main focus should be maintained on the overall investment, tax planning, and wealth management. Distribution of the tax burden The distribution of income tax has been a topic of intense debate since the introduction of taxation on capital gains. This has prompted the key stakeholders to make several time-to-time reforms on the...
8 Pages(2000 words)Research Paper


...Tax Introduction Tax is always a national issue that attracts interest and outcry from the investors, government and citizens in equal measures. Tax, a compulsory payment by citizens to the government, facilitates the development of public projects. However, several controversies affect the collection and administration of taxes across the world. This arises of the exorbitant imposed on people based on their income levels and wealth accumulation. Although taxation should be done on an equal level, government departments are considering a reduction for the middle class and an increase for the wealthy. It is apparent that taxes from the wealthy and income...
2 Pages(500 words)Essay
sponsored ads
We use cookies to create the best experience for you. Keep on browsing if you are OK with that, or find out how to manage cookies.

Let us find you another Case Study on topic Capital Gains Tax Liability for FREE!

Contact Us