Case Study Three
Devi is a resident of Australia for tax purposes and has informed you of the following transactions which occurred during the income year ended 30 June 2015. Devi also informs you that he has unused carried forward capital losses from the 2012 year of $3,000. This loss relates to the sale of land. Additionally he has an $800 carried forward capital loss from the 2014 income year in relation to the sale of painting.
Shares
Devi’s father passed away in October 2014 leaving him a parcel of 30,000 shares in a listed company that he acquired over his lifetime. Devi’s father had acquired the shares in the following way:
Date
Number of Shares
Cost/share
Brokerage
April 1985
10,000
$4.60
$180
September 1998
5,000
$6.20
$270
August 2014
15,000
$8.00
$310
In February 2015, Devi sold all of the shares at $11.00 per share. He incurred brokerage fees of 2% of the proceeds at the time of sale. At the time of his father’s death in October 2014, the shares had a market value of $7.50
House
Devi purchased a rental property on 1 August 1992 for $240,000 and incurred stamp duty and legal expenses of $6,200 in total at the date of purchase. He rented the property out to tenants up until 1 July 2000 when he decided to move into the property himself and commenced using it as his main residence. He paid $63,000 to put a covered outdoor entertaining area onto the rear of the house on 1 July 2006. He entered into a contract to sell the property on 1 June 2015 for $510,000 with settlement to take place on 18 July 2015. The house was used as a main residence by Devi between 1 July 2006 and 1 June 2015 when the property was sold. Interest paid on the property amounted to $6,000 during the period when the property was rented to tenants and $11,000 during the period it was a main residence.
Caravan
Devi sold his caravan (mobile home) for $290,000 on 9 February 2015. Devi had purchased it on 9 February 2010 for $350,000. Devi used the caravan primarily for family holidays.
Required:
Advise Devi as to the capital gain/loss incurred for each of the above separate transactions. Additionally, advise Devi of his net capital gain included in assessable income for the income year ended 30 June 2015 (if any) based on your conclusions. Assume that Devi wishes to minimise his gain wherever possible. Perform calculations of any relevant capital gains and support all conclusions with legislation and/or cases.
Delivering a high-quality product at a reasonable price is not enough anymore.
That’s why we have developed 5 beneficial guarantees that will make your experience with our service enjoyable, easy, and safe.
You have to be 100% sure of the quality of your product to give a money-back guarantee. This describes us perfectly. Make sure that this guarantee is totally transparent.
Read moreEach paper is composed from scratch, according to your instructions. It is then checked by our plagiarism-detection software. There is no gap where plagiarism could squeeze in.
Read moreThanks to our free revisions, there is no way for you to be unsatisfied. We will work on your paper until you are completely happy with the result.
Read moreYour email is safe, as we store it according to international data protection rules. Your bank details are secure, as we use only reliable payment systems.
Read moreBy sending us your money, you buy the service we provide. Check out our terms and conditions if you prefer business talks to be laid out in official language.
Read more