On 1 April 2020, Henry signed a lease with Honest Properties Ltd for a retail shop...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 1 April 2020, Henry signed a lease with Honest Properties Ltd for a retail shop in a new regional shopping centre. The lease was $4,000 per month and operated for two years from 1 May 2020. Henry also had to pay an up-front premium to Honest Properties Ltd of $2,000. However, due to building difficulties, on 28 April 2021 Honest Properties Ltd sought a variation on the lease, of a deferment of the lease for one month, and required Henry to move to another shop elsewhere in the shopping centre. As a result of this, Henry received $5,000 and one month's rent free from Honest Properties Ltd in consideration for agreeing to vary the terms of the lease. Question Assuming Honest Properties Ltd are builders and only occasionally lease property, advise both the lessor and lessee of the tax consequences of the transaction. On 1 April 2020, Henry signed a lease with Honest Properties Ltd for a retail shop in a new regional shopping centre. The lease was $4,000 per month and operated for two years from 1 May 2020. Henry also had to pay an up-front premium to Honest Properties Ltd of $2,000. However, due to building difficulties, on 28 April 2021 Honest Properties Ltd sought a variation on the lease, of a deferment of the lease for one month, and required Henry to move to another shop elsewhere in the shopping centre. As a result of this, Henry received $5,000 and one month's rent free from Honest Properties Ltd in consideration for agreeing to vary the terms of the lease. Question Assuming Honest Properties Ltd are builders and only occasionally lease property, advise both the lessor and lessee of the tax consequences of the transaction.
Expert Answer:
Answer rating: 100% (QA)
Tax consequences for the lessor Lease premium The lease premium of 2000 is a capital receipt and is ... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
Students also viewed these accounting questions
-
The organization you work for (staffing agency) is developing a new product. Review the characteristics of each project management structure, identify the one that most resembles your current...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Mabati Ltd is expected to pay a DPS of Sh.6 in one year's time. The dividend payout ratio is 60% and the Return on Equity is 15%. Using relevant calculations, determine whether the share is...
-
On February 1, 2020, Sheridan Company sells merchandise on account to Carla Vista Company for $6490. The entry to record this transaction by Sheridan Company is Sales Revenue Accounts Payable Notes...
-
If Vo = 3V in the circuit in figure, findVS. I 12 kn Vs(+ 9 kn Vo 3 V +1
-
During a trial on single cylinder four stroke IC engine, the following observations were taken : Mean effective pressure \(=4\) bar, speed \(=200\) RPM, Brake power \(=7.5 \mathrm{~kW}, \mathrm{~L} /...
-
Consider the overall effects on Fossil of selling watches on account for \($53,000\) and paying expenses totaling \($37,000\). What is Fossils net income or net loss? a. Net loss of \($16,000\) b....
-
Juarez, Inc. uses a job-order costing system for its products, which pass from the Machining Department, to the Assembly Department, to finished-goods inventory. The Machining Department is heavily...
-
Given the following data, what is cost of goods sold as determined by the FIFO method? Sales Beginning inventory 260 units 240 units at $3 per unit Purchases 128 units at $10 per unit
-
An important part of planning manufacturing capacity is having a good forecast of sales. Elizabeth Burke is interested in forecasting sales of mowers and tractors in each marketing region as well as...
-
An investment of $15,000 grows to $18,000 earning interest at the rate of 6%/year compounded monthly. = P(1 Examine the information above and state each of the following values as they relate to the...
-
Actors Traveler ( User ) . Description The traveler wants to book a flight that is suitable for him. Pre - Conditions Logged into the system. Events The use case begins when a traveler decides to...
-
How can multi-objective optimization algorithms be applied to enhance the energy efficiency and cost-effectiveness of chemical processes, and what trade-offs are involved in such optimizations ?
-
Discuss the principles of energy storage technologies in supporting renewable energy integration, focusing on the advancements in battery technology, thermal energy storage, and mechanical storage...
-
The following information was taken from the personal records of Justin Knight on May 31, 2021. Opening Balances Cash $3,900 Computer $2,400 House $196,500 Mortgage $103,400 Net Worth $99,400 The...
-
Explain the principles and applications of root cause analysis (RCA) in quality control, examining methods such as the "5 Whys," fishbone diagrams, and fault tree analysis for identifying underlying...
-
What is Code Section 691(c) and how would a taxpayer comply with the code section? What benefit would a taxpayer have by understanding this code section? What is a modern federal tax case that...
-
Below is a sample of the data in the file NFLAttendance which contains the 32 teams in the National Football League, their conference affiliation, their division, and their average home attendance....
-
Define a wholesale funds transfer and identify the parties to such a transfer.
-
The California Dental Association (CDA) is a voluntary nonprofit association of local dental societies to which some nineteen thousand dentists belong, about three-quarters of those practicing in the...
-
On April 29, 2010, Kirsten Fletcher and John E. Marshall III jointly signed a lease to rent an apartment for the term beginning on July 1, 2010, and ending on June 30, 2011, for a monthly rent of...
-
A diesel engine of mass \(300 \mathrm{~kg}\) and operating speed \(1800 \mathrm{rpm}\) is found to have a rotating unbalance of \(1 \mathrm{~kg}-\mathrm{m}\). It is to be installed on the floor of an...
-
A sensitive electronic system, of mass \(30 \mathrm{~kg}\), is supported by a spring-damper system on the floor of a building that is subject to a harmonic motion in the frequency range \(10...
-
A machine of mass \(1150 \mathrm{~kg}\) is mounted on springs. A piston of mass \(m=25 \mathrm{~kg}\) moves up and down in the machine at a speed of \(600 \mathrm{rpm}\) with a stroke of \(350...
Study smarter with the SolutionInn App