2TAXATION THEORY, PRACTICE AND LAWAnswer to Question 1Issue: This case deals with the computation of Eric’s capital gains or loss as per Section 108-10of the ITAA 1997.Regulations: The required regulations are mentioned below:a)Section 108-20 of the ITAA 1997b)Section 108-10 of ITAA 1997 (Burkhauser, Hahn and Wilkins 2015)Application:Asset DescriptionCost BaseCapital ProceedsCapital gainsCapital lossAntique Vase200030001000Antique Chair300010002000Painting 900010008000Home Sound System12000110001000Shares in listed company50002000015000Computation of net capital loss for the yearParticularsAmount ($)Loss on sale of Antique Chair2000Loss on sale of Painting 8000Less: Gain on sale of Antique Vase1000Total Collectable loss to be carried forward9000Computation of Net capital gains for the year ParticularsAmount ($)Gains on sale of shares$15,000It can be seen that Eric used his sound system for his personal use as a personal assets.Thus, as per Section 108-10 of the ITAA 1997, the loss from the sale of sound system is noteligible for set off (Roine and Waldenström, 2012). In addition, the sale of the shares is also not

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