Exam 4: Capital Gains Tax

Roy has operated a sole trader business for 14 years. Roy is 56 and considering selling the business and retiring. Roy seeks your advice as to whether a building that is currently being used by the business is eligible for the CGT small business concessions. Roy advises that the building was purchased 9 years ago and was used only for rent for the first 4 years and then since 5 years ago the building has been used to operate Roy's business. Is the building an active asset?

Eddie purchased some shares in 2008 for $10,000. He also paid brokerage costs of $50 on the purchase. He then sells the shares in May 2020 for $13,000 and pays $65 in brokerage costs on the sale. What would Eddie's cost base be on these shares?

Brian sold a car in March 2020 for $9,000. Brian purchased this car second hand in April 2018 for $8,000. Calculate Brian's net capital gain from the sale of this car?

Which one of the following statements is true?

During the 2020 tax year David advises you that he sold the following assets: 1. A rare coin for $6,000. He purchased the coin 10 years ago for $2,000. 2. A caravan for $10,000. He purchased the caravan 9 years ago for $8,000. 3. Shares in public companies for $10,000. He purchased these shares 11 months ago for $8,000. 4. Cartier watch for $8,000. He was given this watch by his employer 2 months ago for his good service. The market value of the watch at the time David was given the watch was $8,000. What is David's net capital gain for the 2020 year?

Vance purchased a property for $300,000 (inclusive of all purchase and incidental costs) on 20 August 1990 and he sold the property for $510,000 (after costs of sale have been deducted) on 20 March 2020. What is Vance's net capital gain on the sale of this property?

Raoul purchased an income-producing asset for his business in January 2018 for$82?000. Raoul sold this asset for$50?000January 2020. During the years that he held this asset, Raoul claimed deductions for capital works for this asset of$10?000. What is Raoul's capital gain or loss for the 2020 tax year?

Les purchased a property for $200,000 and also paid stamp duty of $2,500 and land broker fees of $1,000 and title transfer fees of $200. The seller paid $4,000 in agent commissions to the real estate agent. What is Les's cost base in this property?

Amadeo has agreed to not appear in any movies made by any other movie studio for the next 5 years, other than the studio he is contracted to, and in return he has received a lump sum payment of $50,000. Is there a CGT asset involved here?

During the 2020 tax year, Terry sold a boat for $20,000. The boat cost Terry $45,000. Terry also sold an item of antique furniture for $15,000 (the item cost him $5,000 3 years ago). What is terry's net capital gain or loss for the 2020 tax year?

Dean sold some land in February 2020 to his daughter, Tina, for $50,000. The land cost Dean $20,000 in 2001. When the land was sold in 2020 the market value of the land was determined to be $200,000. What will Tina's cost base be on this land she purchased from Dean in February 2020?

Sue decides to give a parcel of land to her son for no consideration. Has a CGT event occurred?

Jamie purchased land in 2012 for $150,000. He then constructed a house on that property for $250,000. During the period of time it took to complete the building of the house, Jamie paid $18,000 in interest to the bank on a loan for the property and council rates and land tax of $1,200 in total. These costs were incurred in the year before Jamie started receiving any rent on the property. After construction of the house and before the property was rented, what is Jamie's cost base in this property?

In April 2010, Lisa bought a six-room house to live in. She rented it out until April 2014 when she got a job in another city. Lisa then moved back into the house and the house was sold in April 2020 and Lisa made a capital gain of$44 000 (after applying the CGT discount). What is the CGT treatment of the sale?

If a rental property is destroyed by fire this would constitute what type of CGT event?

Carol signed a contract to sell her rental property in June 2020 for settlement to take place in December 2020. She will make a net capital gain of $50,000 from the sale of this rental property. In which year will the net capital gain have to be included in carol's assessable income?

Marty has sold a business and after applying the CGT discount and all the available CGT small business concessions, except the small business rollover, Marty has a net capital gain remaining of $300,000. Which of the following statements is then true?

Mark purchased some land in June 1983 for $80,000. In July 2000 Mark constructed a building on the land for a cost of $400,000. Mark sells the land and building for $2 million in June 2020. In the sale contract it is agreed that the value of the building at the date of the sale was $1 million and the value if the land was $1 million. Will Mark have any CGT liability when he sells the land and building?

A valuable sports trading card featuring the signature of the famous NBA player Michael Jordan would be what kind of CGT asset?

Jack purchased some land in July 1984 for $50,000 and in May 2020 he sold this land for $500,000. Which of the following statements is true in respect to the sale of this land?