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Estimation of Annual Net Capital Profit or Loss

   

Added on  2020-04-07

9 Pages2215 Words56 Views
1Taxation Law<Student ID><Student Name><University Name>
Estimation of Annual Net Capital Profit or Loss_1
2ContentsQuestion 1..................................................................................................................................3Question 2..................................................................................................................................4Question 3..................................................................................................................................5Question 4..................................................................................................................................6Question 5..................................................................................................................................7References..................................................................................................................................8
Estimation of Annual Net Capital Profit or Loss_2
3Question 1Estimation of annual net capital profit or loss:IssueEric has depicted instances of procuring assets in the last one year. Therefore it can beobserved that the possession of the assets with Eric was valid for a period less than a year.The concerns of taxability of capital gains in this case can be realized only in response to thecondition of the asset’s selling price being greater than the cost base at which it was acquired(Aguilar Rubio, 2016). One important condition that could be observed in the case of Eric isthe inability to obtain indexation benefit since the assets were held for less than a year. Theassets could be reviewed for taxability as follows:RuleThe assets which are purchased by individuals for fulfilling personal objectives or enjoymentand recreation could be termed as assets for personal use. Collectibles are not includedamong the assets meant for personal use (Andersen & Cohen, 2013). The sale of assets thathave procurement costs less than $10000 cannot be subject to taxation on the capital profitsgained from profits. The assets purchased by Eric for personal use include the shares of alisted company at the cost of $5000 and the home sound system at $12000.ApplicationThe assets which are procured for fulfilling additional objectives such as self efficacies aswell as providing enjoyment just as in case of personal assets. The capital gains acquiredfrom the sale of collectibles obtained at costs equal to or less than $500 cannot be subject totaxation (Deak, 2014). The collectibles which were procured by Eric include an antique chairat the cost of $3000, an antique vase at the cost of $2000 and a painting at the cost of $9000. The information regarding the procurement costs of personal assets and collectibles could beutilized for computing capital profits on the assets that were with Eric for less than a year(Demin, 2014).Capital data of the assetsAssetCost Base of AssetsCapital Proceeds ofAssetsNet Capital Profit/(Net Capital Loss)Home Sound12,00011000(1000) Loss
Estimation of Annual Net Capital Profit or Loss_3

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