Watson Co becomes insolvent and placed into voluntary liquidation by its directors. Dissolve liquidators have been appointed as the company liquidators. On the winding up of the Watson Co, Dissolve liquidators have started distributions and Paul as ex-shareholder of Watson Co received $7,200 from the liquidators, which was inclusive of $3,000 unfranked dividend pursuant to the provision of Income Tax Assessment Act 1963, section 47(1). This distribution to Paul was from his $4,000 investment in the shares of Watson Co on 2nd February 2019. Required: With reference to relevant provisions of ITAA 97 and ITAA 36, critically analyze the tax consequences of the above scenario for Paul.
Watson Co becomes insolvent and placed into voluntary liquidation by its directors. Dissolve liquidators have been appointed as the company liquidators. On the winding up of the Watson Co, Dissolve liquidators have started distributions and Paul as ex-shareholder of Watson Co received $7,200 from the liquidators, which was inclusive of $3,000 unfranked dividend pursuant to the provision of Income Tax Assessment Act 1963, section 47(1). This distribution to Paul was from his $4,000 investment in the shares of Watson Co on 2nd February 2019. Required: With reference to relevant provisions of ITAA 97 and ITAA 36, critically analyze the tax consequences of the above scenario for Paul.
Chapter6: Corporations: Redemptions And Liquidations
Section: Chapter Questions
Problem 4BCRQ
Related questions
Question
Watson Co becomes insolvent and placed into voluntary liquidation by its
directors. Dissolve liquidators have been appointed as the company liquidators. On the winding up of
the Watson Co, Dissolve liquidators have started distributions and Paul as ex-shareholder of Watson
Co received $7,200 from the liquidators, which was inclusive of $3,000 unfranked dividend pursuant
to the provision of Income Tax Assessment Act 1963, section 47(1). This distribution to Paul was from
his $4,000 investment in the shares of Watson Co on 2nd February 2019.
Required:
With reference to relevant provisions of ITAA 97 and ITAA 36, critically analyze the tax consequences
of the above scenario for Paul.
Expert Solution
This question has been solved!
Explore an expertly crafted, step-by-step solution for a thorough understanding of key concepts.
This is a popular solution!
Trending now
This is a popular solution!
Step by step
Solved in 2 steps
Knowledge Booster
Learn more about
Need a deep-dive on the concept behind this application? Look no further. Learn more about this topic, accounting and related others by exploring similar questions and additional content below.Recommended textbooks for you
Individual Income Taxes
Accounting
ISBN:
9780357109731
Author:
Hoffman
Publisher:
CENGAGE LEARNING - CONSIGNMENT