Concept explainers
State whether the equipment is a capital asset.
Explanation of Solution
Capital Assets: Capital assets are held by assesse, whether associated with business or profession or not associated with business or profession. It comprises all kinds of assets like property, tangible, intangible, movable or immovable.
Initially, Person H should ascertain whether these assets are used in a business. As Person H is a farmer, the assumption appears to be reasonable that Person H is in the farming business. As a result, the
Want to see more full solutions like this?
Chapter 17 Solutions
Individual Income Taxes
- Alex is a carpenter who purchased a vacant block of land in Sydney on 1 October 1980. On 1 September 1986, Alex built a house on the land. At the time, the land was valued at $110,000 and the cost of construction was $100,000. Immediately, after the construction finished, the property has been rented out. On 1 March 2019, Alex sold the property at auction for $1,400,000.With reference to relevant legislation/case law, determine: a) Alex’s net capital gain or net capital loss for the year ended 30 June 2019 using both Discount method and Indexation method.arrow_forwardA taxpayer, who is single, purchased a house on May 10, 1988, for $175,000. During the years he owned the house, he installed a pool at a cost of $20,000 and built a new garage at a cost of $20,000. On October 12, 2022, he sold the house for $518,000 and paid a sales commission of $25,000. What is the (a) realized gain and (b) recognized gain on the sale of the house? (Show your calculations for partial credit review.)arrow_forward
- Individual Income TaxesAccountingISBN:9780357109731Author:HoffmanPublisher:CENGAGE LEARNING - CONSIGNMENT