Augustine was made redundant from her employment on 15 March 2020. He is a motor car...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
Augustine was made redundant from her employment on 15 March 2020. He is a motor car enthusiast, and so decided to take this opportunity to indulge his hobby. On 1 April 2020, Jane took out a bank loan of Rs 750,000 at an annual interest rate of 10%, rented a workshop for twelve months at a rent of Rs 4,000 month, and purchased high precision equipment at a cost of Rs 235,000. On 10 April 2020, Augustine purchased four dilapidated motor cars for Rs 80,000 each. The restoration of the four motor cars was completed on 10 May 2020 at a cost of Rs 120,000 per motor car. Augustine immediately sold all the motor cars for a total of Rs 2,000,000. Augustine was then offered employment elsewhere in the country commencing on 1 July 2020. He therefore sold the equipment for Rs 150,000 on 20 June 2020, repaid the bank loan on 30 June 2020. As he has been indulging his hobby, Augustine believes that the disposal of the motor cars during the year ended 30 June 2020 should be exempt from tax. He had no other income during that fiscal year ending June 2020 and is entitled to deductions in respect of 3 dependents. Required: a) Discuss whether or not Augustine is likely to be treated as carrying on a trade in respect of his motor car activities. b) Calculate Augustine's income tax liability for the year ended 30 June 2020, if he is treated as carrying on a trade in respect of her motor car activities. Augustine was made redundant from her employment on 15 March 2020. He is a motor car enthusiast, and so decided to take this opportunity to indulge his hobby. On 1 April 2020, Jane took out a bank loan of Rs 750,000 at an annual interest rate of 10%, rented a workshop for twelve months at a rent of Rs 4,000 month, and purchased high precision equipment at a cost of Rs 235,000. On 10 April 2020, Augustine purchased four dilapidated motor cars for Rs 80,000 each. The restoration of the four motor cars was completed on 10 May 2020 at a cost of Rs 120,000 per motor car. Augustine immediately sold all the motor cars for a total of Rs 2,000,000. Augustine was then offered employment elsewhere in the country commencing on 1 July 2020. He therefore sold the equipment for Rs 150,000 on 20 June 2020, repaid the bank loan on 30 June 2020. As he has been indulging his hobby, Augustine believes that the disposal of the motor cars during the year ended 30 June 2020 should be exempt from tax. He had no other income during that fiscal year ending June 2020 and is entitled to deductions in respect of 3 dependents. Required: a) Discuss whether or not Augustine is likely to be treated as carrying on a trade in respect of his motor car activities. b) Calculate Augustine's income tax liability for the year ended 30 June 2020, if he is treated as carrying on a trade in respect of her motor car activities.
Expert Answer:
Answer rating: 100% (QA)
a Augustine is not likely to be treated as carrying on a trade in respect of his motor car activiti... View the full answer
Related Book For
South western Federal Taxation 2017 Corporations, Partnerships, Estates and Trusts
ISBN: 9781305874336
40th edition
Authors: William H. Hoffman, William A. Raabe , David M. Maloney, James C. Young
Posted Date:
Students also viewed these accounting questions
-
An enterprising student invests $1,000 at an annual interest rate that will grow the original investment to $2,000 in four years. In four more years, the amount will grow to $4,000, and this pattern...
-
Consider a $1000 investment at an annual interest rate of 6.5%, compounded quarterly. Find the balance after a. 10 years b. 20 years c. 30 years
-
You are investing P dollars at an annual interest rate of r, compounded continuously, for t years. Which change below results in the highest value of the investment? Explain. (a) Double the amount...
-
For what number does the principal square root exceed eight times the number by the largest amount?
-
List the key parts of a typical business plan.
-
The following account balances relate to the stockholders' equity accounts of Lily Corp. at year-end. 2022 2021 Common stock, 10,500 and 10,000 shares, issued and outstanding, respectively, for 2022...
-
What does it mean to say that gender is culturally constructed?
-
Genette Henderson was just promoted to supervisor of building maintenance for the Ford Valley Theater complex. Allpoints Entertainment, Inc., Hendersons employer, uses a company-wide system for...
-
2) If you strike a pool ball with just the right amount of back spin, it will come to a perfect stop. (a) What is the appropriate relationship between the initial velocity, vi, and the initial...
-
In Exercise 6 of Chapter 2, data on numbers of publications were given for an SRS of 50 faculty members. Not all departments were represented, however, in the SRS. The SRS contained several faculty...
-
Researchers from Tenon Hospital in Paris reported to the American Urological Association that dogs can be trained to detect the odor of chemicals released into urine by prostate cancer. The...
-
Which of the three defendants is entitled to the defense of ignorance of law? Support your answer with the information in your text regarding mens rea, ignorance and mistake generally, and the...
-
A certain muon detector counts 600 muons per hour at an altitude of \(1900 \mathrm{~m}\) and 380 muons per hour at sea level. Given that the muon half-life at rest is \(1.5 \times 10^{-6}...
-
An object 1 of mass \(m_{1}\) is separated by some distance \(d\) from an object 2 of mass \(2 m_{1}\). An object 3 of mass \(m_{3}\) is to be placed between them. If the potential energy of the...
-
An electron \(\mathrm{e}^{-}\)and positron \(\mathrm{e}^{+}\)moving at the same speed in the Earth reference frame collide head-on and produce a proton \(\mathrm{p}\) and an antiproton...
-
Planets \(\mathrm{A}\) and \(\mathrm{B}\) are 10 light years apart in the reference frame of planet A. (One light year is the distance light travels in one year.) A deep-space probe is launched from...
-
8. The circular arc is rotated through 360 about the y axis. Determine the outer surface area of the resulting body, which is a portion of a sphere. [22ra]
-
A report from the college dean indicates that for the previous semester, the grade distribution for the Department of Psychology included 135 As, 158 Bs, 140 Cs, 94 Ds, and 53 Fs. Determine what kind...
-
Where can a researcher find newly issued Proposed, final, and Temporary Regulations?
-
On January 1, Kinney, Inc., an S corporation, reports $4,000 of accumulated E & P and a balance of $10,000 in AAA. Kinney has two shareholders, Erin and Frank, each of whom owns 500 shares of...
-
In determining Blue Corporation's current E & P for 2016, how should taxable income be adjusted as a result of the following transactions? a. A capital loss carryover from 2015, fully used in 2016....
-
The following data refer to a compound impulse turbine having two rows of moving blades and one row of fixed blades in between them. Nozzle angle \(=15^{\circ}\), Exit velocity of steam from the...
-
In a \(50 \%\) reaction turbine stage running at \(50 \mathrm{rps}\), the exit angles are \(30^{\circ}\) and the inlet angles are \(50^{\circ}\). The mean diameter is \(1 \mathrm{~m}\). The steam...
-
At a stage of reaction turbine, the mean diameter of rotor is \(1.4 \mathrm{~m}\). the speed ratio is 0.7. Determine the blade inlet angle if the blade outlet angle is \(20^{\circ}\). The rotor speed...
Study smarter with the SolutionInn App