Discuss possible discounts and exemptions

Assignment Help Taxation
Reference no: EM13498801

Gordon and his wife Pamela have finally decided to retire.

They set up a chocolate business sixteen years ago when they obtained the Australian rights to an American chocolate company. They proceeded to manufacture and wholesale the chocolates and also opened up some cafes and retailed from those premises. They used a company called "American Chocolates Pty Ltd" for all these purposes. There were only two shares in that company and one share is allocated to Gordon and one share is allocated to Pamela.

Their son Joshua has taken over the business and has been successfully expanding the business for the past ten years. Gordon and Pamela mortgaged their home to finance the expansion but their son repaid the loan in full. The business operates all over Australia and is well known.
Gordon's son has never paid anything for the business. However their son has now offered to pay his parents $6million. In return they have agreed to transfer all their interest in the business and company to Joshua. Their son wants to claim a tax deduction for that payment but Gordon and Pamela have asked you how they should treat this payment.

Advise Gordon and Pamela about capital gains and income tax consequences and any effect that their son's tax treatment of the payment will have on them. You should discuss possible discounts and exemptions that may be available to them.

Reference no: EM13498801

Questions Cloud

Calculate the volume of the bubble : An air bubble has a volume of1.80cm3when it is released by a submarine105m below the surface of a lake. What is the volume of the bubble
What is its radius at liftoff : A weather balloon is designed to expand to a maximum radius of17m at its working altitude, what is its radius at liftoff
Solid wastes : Solid Wastes
Explain word equations and balanced chemical equations : Word equations and balanced chemical equations for the burning of carbon and burning of sulphur
Discuss possible discounts and exemptions : Advise Gordon and Pamela about capital gains and income tax consequences and any effect that their son's tax treatment of the payment will have on them. You should discuss possible discounts and exemptions that may be available to them.
Explain potassium metal reacts with oxygen gas o² : Write the balanced equations for bothof the following reactions and identify the type of reaction for each: Potassium metal reacts with oxygen gas O² to form solid potassium oxide
Potential barriers to implementing your care plan : Potential Barriers to implementing your care plan - Creating a culture for interdisciplinary collaborative professional practice
Create the performance appraisal : From the e-Activity, examine two (2) methods of job analysis described in the video. Propose two (2) ways that you as an HR professional would use each method of job analysis to create a job description, develop a selection process, develop a ..
Evaluate the initial partial pressures of o2 : Knowing that air contains 21% O2 and 79% N2 by volume, calculate the initial partial pressures of O2 and N2.

Reviews

Write a Review

Taxation Questions & Answers

  Question prepare an essay in which you recommend the most

question prepare an essay in which you recommend the most advantageous tax filing status for spouse a and spouse b on

  Evaluate the income tax return for the current year

He has the subsequent items pertaining to his income tax return for the present year

  Seek additional funds to finance dlks working capital

Because of intense competition, DLK struggled for the first few years of operation and the corporation sustained chronic losses. This year, Lacey, DLK's president, decided to seek additional funds to finance DLK's working capital.

  What is the recognized gain and the basis for the bonds

Taxpayer receives stock as a gift from his nephew. The adjusted basis of the stock is $10,000 and the fair market value is $30,000. Taxpayer trades the stock for bonds with a fair market value of $25,000 and $5,000 cash. What is his recognized gai..

  Part a explain why the payment to the taxpayer in fct v

part a explain why the payment to the taxpayer in fct v dixon 1952 86 clr 540 was assessable income but the payment in

  Calculate barbs taxable income

Calculate Barb's taxable income? What nonrefundable credit is Barb eligible for based on the information you have?

  Tax implications of proposed financing agreement

Tax accountant, to advise them on the tax implications of the proposed financing agreement. After researching the matter, issue your advice in a tax research memo.

  The items cause taxable income

The following items cause taxable income to be different than pretax financial income.

  Discuss the changes made in sfas 158 and sfas 132

corporate income tax is an expense, not a distribution of the profits to the government - company should report changes in the deferred tax asset and liability accounts as footnotes in 10-k

  Discuss the tax treatment

Discuss the tax treatment that Bob may take with regard to this loan.

  Create a flowchart describing the general process

You are required to create a flowchart describing the general process and information flows at Top Notch T-Shirt Printing.

  What amount can katie claim as a tax deduction

Based on this information what amount can Katie claim as a tax deduction under s 25-10 ITAA 97 in the year ended 30 June 2012 (nearest $1)? Support your answer with reference to appropriate authority.

Free Assignment Quote

Assured A++ Grade

Get guaranteed satisfaction & time on delivery in every assignment order you paid with us! We ensure premium quality solution document along with free turntin report!

All rights reserved! Copyrights ©2019-2020 ExpertsMind IT Educational Pvt Ltd