Reference no: EM132670290

Question: Philip's father passes away in August 2019 leaving Philip a gift of a property under his will which his father purchased as a long term investment on 15 August 1980 for $65,000. The property had a market value of $500,000 when Philip's father died. Philip enters into a contract to sell the property in June 2020 for $530,000. The contract settles in August 2020.

How is Philip's capital gain calculated and in which income year will Philip be assessed on the capital gain?

$530,000 - $500,000 = $465,000 in the 2020-21 income year

$500,000 - $65,000 = $435,000 in the 2019-20 income year.

$500,000 - $65,000 = $435,000 in the 2020-21 income year.

$530,000 - $500,000 = $30,000 in the 2019-20 income year.

$530,000 - $65,000 = $465,000 in the 2019-20 income year.