QUESTION 1 (55 marks) Bob Mahlangu (6102027863070), a resident of South Africa, died unexpectedly on 2...

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QUESTION 1 (55 marks) Bob Mahlangu (6102027863070), a resident of South Africa, died unexpectedly on 2 March 2024 at his residence, 24 Morrow Street, Sandton, Johannesburg. He is survived by his spouse Neo Mahlangu (6408034031080) and son Matteo Mahlangu. His estate consisted of the following assets with market valuations provided at the time of death: 1. Residence in Johannesburg (purchased in 2004, for R1 800 000), market value of R3 250 000. 2. Furniture and household items valued at R800 000 (purchased in 2004, for an amount of R900 000). 3. Motor vehicle (Model 2018, X4 MBW, reg. no. KK36BT GP, cost price R850 000) valued at R780 000. 4. 200 000 shares in Gold Fields Ltd. These shares were acquired by Bob in 2008 at R8 per share. The listed market value at the date of death of a share was R12,33. The executor sold all the shares during the liquidation process on 10 April 2024, for R2 850 000. 5. Investment in a Chiking (Pty) Ltd, a restaurant franchise. A 25% share was acquired for R600 000 in 2018. The company's auditors valued the company at R3million on 29 February 2024. The company declared a dividend of R90 000 on 29 February 2024 which was paid out on 31 March 2024 to its shareholders. 6. A life insurance policy payout of R1 200 000 payable directly to Neo, in terms of a properly registered ante-nuptial contract. 7. An annuity of R150 000 per annum from his sister Mary Ndlovu. This was payable from net rentals from their deceased father's block of flats that was bequeathed to her in 2000. The annuity ceased upon Bob's death. 8. Fixed deposit of R105 416 at Capitec Bank. Included in this amount is interest of R1 396, made up of R971 which accrued before Bob's death and R425 which accrued after Bob's death until when the executor collected it when the account was closed at the bank. The following liabilities and expenses need to be settled: 9. Various liabilities of R164 300 and funeral expenses of R36 000. Bob's last will and testament provided for the following bequests: A right of use (i.e. a usufruct) over the residence only as well as the furniture and household items were bequeathed to Neo Mahlangu The motor vehicle and the bare dominium of the residence were awarded to his sister Mary Ndlovu. The remainder of the estate was bequeathed to his son Matteo Mahlangu. Other relevant information: - At the date of Bob's death, the ages of the relevant persons were as follows: Bob: 63 years 1 month Neo: 59 years 7 months Matteo: 26 years 2 months Mary: 56 years 10 months The master's reference number is 1567/2024. The executor's remuneration and master's fees need to still be taken into account (at the prescribed tariffs). The executor is not a registered VAT vendor. Bob was married to Neo out of community of property, with accrual. Neo instituted an accrual claim of R500 000 against the estate. Assignment 2 4 QUESTION 1 (continued) REQUIRED: MARKS 1. Calculate the right of use of the residence (i.e. the usufruct) that Bob Mahlangu bequeaths to his surviving spouse Neo Mahlangu, upon his death. 3 2. Compile a complete executor's account for the estate of Bob Mahlangu for submission to the Master of the High Court. 39 Note: You must include all the necessary information that is required in terms of the regulations of the Administration of Estates Act 66 of 1965. 3. Assume Neo dies exactly three years after Bob's death (i.e. 2 March 2027), calculate the usufruct value that must be included in her estate when calculating the estate duty payable. 10 Assume the following additional information: - Neo remained a widow. -The market value of the residence at Neo's death increased to R3 800 000. -The usufruct ends upon Neo's death. -The current legislation still applies. 4. Calculate the capital gain/loss for the deceased Bob Mahlangu for only the listed shares and the motor vehicle assets. Provide reasons if the capital gain/loss is to be excluded when calculating the taxable capital gain. 3 QUESTION 1 (55 marks) Bob Mahlangu (6102027863070), a resident of South Africa, died unexpectedly on 2 March 2024 at his residence, 24 Morrow Street, Sandton, Johannesburg. He is survived by his spouse Neo Mahlangu (6408034031080) and son Matteo Mahlangu. His estate consisted of the following assets with market valuations provided at the time of death: 1. Residence in Johannesburg (purchased in 2004, for R1 800 000), market value of R3 250 000. 2. Furniture and household items valued at R800 000 (purchased in 2004, for an amount of R900 000). 3. Motor vehicle (Model 2018, X4 MBW, reg. no. KK36BT GP, cost price R850 000) valued at R780 000. 4. 200 000 shares in Gold Fields Ltd. These shares were acquired by Bob in 2008 at R8 per share. The listed market value at the date of death of a share was R12,33. The executor sold all the shares during the liquidation process on 10 April 2024, for R2 850 000. 5. Investment in a Chiking (Pty) Ltd, a restaurant franchise. A 25% share was acquired for R600 000 in 2018. The company's auditors valued the company at R3million on 29 February 2024. The company declared a dividend of R90 000 on 29 February 2024 which was paid out on 31 March 2024 to its shareholders. 6. A life insurance policy payout of R1 200 000 payable directly to Neo, in terms of a properly registered ante-nuptial contract. 7. An annuity of R150 000 per annum from his sister Mary Ndlovu. This was payable from net rentals from their deceased father's block of flats that was bequeathed to her in 2000. The annuity ceased upon Bob's death. 8. Fixed deposit of R105 416 at Capitec Bank. Included in this amount is interest of R1 396, made up of R971 which accrued before Bob's death and R425 which accrued after Bob's death until when the executor collected it when the account was closed at the bank. The following liabilities and expenses need to be settled: 9. Various liabilities of R164 300 and funeral expenses of R36 000. Bob's last will and testament provided for the following bequests: A right of use (i.e. a usufruct) over the residence only as well as the furniture and household items were bequeathed to Neo Mahlangu The motor vehicle and the bare dominium of the residence were awarded to his sister Mary Ndlovu. The remainder of the estate was bequeathed to his son Matteo Mahlangu. Other relevant information: - At the date of Bob's death, the ages of the relevant persons were as follows: Bob: 63 years 1 month Neo: 59 years 7 months Matteo: 26 years 2 months Mary: 56 years 10 months The master's reference number is 1567/2024. The executor's remuneration and master's fees need to still be taken into account (at the prescribed tariffs). The executor is not a registered VAT vendor. Bob was married to Neo out of community of property, with accrual. Neo instituted an accrual claim of R500 000 against the estate. Assignment 2 4 QUESTION 1 (continued) REQUIRED: MARKS 1. Calculate the right of use of the residence (i.e. the usufruct) that Bob Mahlangu bequeaths to his surviving spouse Neo Mahlangu, upon his death. 3 2. Compile a complete executor's account for the estate of Bob Mahlangu for submission to the Master of the High Court. 39 Note: You must include all the necessary information that is required in terms of the regulations of the Administration of Estates Act 66 of 1965. 3. Assume Neo dies exactly three years after Bob's death (i.e. 2 March 2027), calculate the usufruct value that must be included in her estate when calculating the estate duty payable. 10 Assume the following additional information: - Neo remained a widow. -The market value of the residence at Neo's death increased to R3 800 000. -The usufruct ends upon Neo's death. -The current legislation still applies. 4. Calculate the capital gain/loss for the deceased Bob Mahlangu for only the listed shares and the motor vehicle assets. Provide reasons if the capital gain/loss is to be excluded when calculating the taxable capital gain. 3