Taxation Law
Added on 2023-01-04
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Running head: TAXATION LAW
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID
Taxation Law
Name of the Student
Name of the University
Authors Note
Course ID
TAXATION LAW1
Table of Contents
Introduction:...............................................................................................................................2
Tax Implications involving the sale of house:...........................................................................2
Tax consequences of legal fees:.................................................................................................3
Computation of taxable income:................................................................................................4
Conclusion:................................................................................................................................6
References:.................................................................................................................................7
Table of Contents
Introduction:...............................................................................................................................2
Tax Implications involving the sale of house:...........................................................................2
Tax consequences of legal fees:.................................................................................................3
Computation of taxable income:................................................................................................4
Conclusion:................................................................................................................................6
References:.................................................................................................................................7
TAXATION LAW2
Introduction:
The present report is based on ascertaining tax treatment of transactions reported by
Chris Matthews derived from several sources. The report would consider the taxability of
income earned and deduction of expenses incurred by the taxpayer from the rendering
personal services and consultancy business. The report would also consider the tax treatment
of capital gains obtained from selling the main residence and deductibility of legal fees that is
occurred by taxpayer in defending the lawsuit of negligence.
Tax Implications involving the sale of house:
For main residence to be implemented on the dwelling, the house should qualify as
the main residence for the taxpayer. Whether the dwelling forms the main residence of the
taxpayer it will be the question of fact (Barkoczy 2014). The commissioner has stated that to
get the main residence, it is necessary that the property has the dwelling on it and the
taxpayer has lived in it. The taxpayers are only allowed to get full main residence when the
house is not used by them for producing taxable income such as renting it out. To ascertain
the net value of capital gains, the taxpayer should determine the market value of the main
residence particularly the time when the taxpayer used the main dwelling for obtaining the
taxable income.
The property was purchased by Chris on 1st March which he used for producing
revenue. The property was eventually sold by Chris on 3rd July 2014 for $1,000,000. During
his ownership Chris used the house in the form of main residence while for certain time
period the house a certain part of house was used for running his personal consultancy
business (Grange, Jover-Ledesma and Maydew 2014). Chris modified the rooms so that it
become appropriate to conduct business activity while the remaining portion of house was
used for personal purpose. The business purpose use of the house comprised of 5% of total
Introduction:
The present report is based on ascertaining tax treatment of transactions reported by
Chris Matthews derived from several sources. The report would consider the taxability of
income earned and deduction of expenses incurred by the taxpayer from the rendering
personal services and consultancy business. The report would also consider the tax treatment
of capital gains obtained from selling the main residence and deductibility of legal fees that is
occurred by taxpayer in defending the lawsuit of negligence.
Tax Implications involving the sale of house:
For main residence to be implemented on the dwelling, the house should qualify as
the main residence for the taxpayer. Whether the dwelling forms the main residence of the
taxpayer it will be the question of fact (Barkoczy 2014). The commissioner has stated that to
get the main residence, it is necessary that the property has the dwelling on it and the
taxpayer has lived in it. The taxpayers are only allowed to get full main residence when the
house is not used by them for producing taxable income such as renting it out. To ascertain
the net value of capital gains, the taxpayer should determine the market value of the main
residence particularly the time when the taxpayer used the main dwelling for obtaining the
taxable income.
The property was purchased by Chris on 1st March which he used for producing
revenue. The property was eventually sold by Chris on 3rd July 2014 for $1,000,000. During
his ownership Chris used the house in the form of main residence while for certain time
period the house a certain part of house was used for running his personal consultancy
business (Grange, Jover-Ledesma and Maydew 2014). Chris modified the rooms so that it
become appropriate to conduct business activity while the remaining portion of house was
used for personal purpose. The business purpose use of the house comprised of 5% of total
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