Anna has been in the business of breeding stock horses on her 25 - acre property for the past 20 years. Now retiring from the business, Anna has decided to sub-divide and sell off her land in small parcels. She has been advised by her neighbours who have done the same thing that she will achieve a much better price for the farm by doing this. Anna engaged a surveyor and applied to the local council for the relevant development applications. Deciding to retain a block of 50 acres on which her house was situated and so that she could still keep a few horses. She then sub-divided the remaining land into forty blocks of five acres. All up the sub - division work cost Anna $200,000 which included removal of trees, land levelling and road clearing. In March 2023, Anna was $2,200,000 by a property developer for ten of the blocks. She accepted the offer and settlement took place in April 2023. The developer then went on to connect utilities and offer house and land packages for sale. Ten of the blocks remained unsold as at 30 June 2023. With reference to relevant legal authority, advise Anna of the taxation consequences of the sale of the blocks. Anna is registered for GST since July 2014.

Anna has been in the business of breeding stock horses on her 25 - acre property for the past 20 years. Now retiring from the business, Anna has decided to sub-divide and sell off her land in small parcels. She has been advised by her neighbours who have done the same thing that she will achieve a much better price for the farm by doing this. Anna engaged a surveyor and applied to the local council for the relevant development applications. Deciding to retain a block of 50 acres on which her house was situated and so that she could still keep a few horses. She then sub-divided the remaining land into forty blocks of five acres. All up the sub - division work cost Anna $200,000 which included removal of trees, land levelling and road clearing. In March 2023, Anna was $2,200,000 by a property developer for ten of the blocks. She accepted the offer and settlement took place in April 2023. The developer then went on to connect utilities and offer house and land packages for sale. Ten of the blocks remained unsold as at 30 June 2023. With reference to relevant legal authority, advise Anna of the taxation consequences of the sale of the blocks. Anna is registered for GST since July 2014.

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

See similar textbooks

Similar questions

Jagdeep sold his Indian restaurant “Maya no Dhaba” to Jasleen for the amount of $450,000. On top of that, Jasleen paid another $50,000 for Jagdeep to agreed that he won’t open a new Indian restaurant in the radius of 10 Kms for the next five years.Discuss whether the $50,000 payment is considered as Ordinary Income?
Glen Campbell owns a small office building adjacent to an airport. He acquired the property 10 years ago at a total cost of $608,000—that is, $70,000 for the land and $538,000 for the building. He has just received an offer from a realty company that wants to purchase the property; however, the property has been a good source of income over the years, and so Campbell is unsure whether he should keep it or sell it. His alternatives are as follows: a. Keep the property. Campbell's accountant has kept careful records of the income realized from the property over the past 10 years. These records indicate the following annual revenues and expenses: Campbell makes a $13,450 mortgage payment each year on the property. The mortgage will be paid off in eight more years. He has been depreciating the building by the straight-line method, assuming a salvage value of $80,700 for the building, which he still thinks is an appropriate figure. He feels sure that the building can be rented for another…
Angus and his sister Oona operate a small charter flight service that takes tourists on sightseeing tours over the beautiful Margaree River on Cape Breton Island. At the end of 2009, they had one four-seater plane in the aircraft asset class with a UCC of $30 000. In 2010, they purchased a second plane for $50 000. Business was going well in 2011, so they sold the old plane they had in 2009 for $15 000 and bought a newer version for $64 000. What was the UCC balance in the aircraft asset class at the end of 2012? The CCA rate for aircraft is 25 percent.
Ringo owns 5 acres of rental property. Yoko rents the property to graze cows for one year and pays the rent with autographed copies of old records autographed by her late husband John. The lease called for rent of $10,000. How much income will Ringo recognize?
The Blowing Rock Partnership purchased land for $1,200,000 with plans to build a spa on the site. The partnership tore down several buildings on the property for $20,000. Salvaged materials with a cost of $6,000 will be repurposed in the spa. Trees were removed for $5,000 and drainage was added for $30,000. The area was fenced for $41,000. A preliminary consultation with an architect cost $2,500 and legal fees of $3,200 were paid in connection with changing the zoning of the property. What accounts will be debited for these costs? O Land, $1,249,000; Land Improvements, $41,000; Building, $5,700 O Land, $1,235,000; Land Improvements, $55,000; Architect Expense, $2,500,000; Legal Expense, $3,200 Land, $1,255,000; Land Improvements, $41,000; Building, $11,700 O Land, $1,249,000; Land Improvements, $41,000; Building, $2,500; Legal Expense, $3,200
Pamela recently moved to Celebration, Florida, an unincorporated master-planned community in Osceola County that connects directly to the Walt Disney World parks. To support the planned community's environmentally friendly transit system and to save on transportation costs, she wants to buy a new Neighborhood Electric Vehicle (NEV). She is looking into three models of the NEVs and has been provided with the information below. Compare the alternatives shown and determine which model should be purchased if Pamela's personal MARR is 8% per year. Initial costs Dynasty Might-E Zenn $13,000 $13,550 $14,000 Annual expenses $4,781 $5,281 $6,081 Annual savings $6,781 $7,581 $7,581 Salvage value $1,300 $1,600 $2,000 Life (years) 10 10 10 10 IRR 9.64% 11.93% 3.36%
-Betty is an unmarried attorney. During the year a hurricane completely destroys her home, which had a basis of $60,000. The value of her home before the tornado is $100,000 and the value afterwards is $35,000. Betty's home is located in a federally declared natural disaster area. Her AGI is $50,000. What is the amount that Betty can deduct after limitations? Group of answer choices $29,900. $54,900. $59,900. $65,000.
Charlotte purchased a house on 1st January 2005 for £150,000 and lived in it until 31st December 2010. She then worked abroad for 2 years before returning to the UK to live again in the house on 1st January 2013. Charlotte then lived in the house until 31st December 2016. On 1st January 2017 she embarked on a 12 month world tour before returning to the UK on 31st December 2017, when she retired and moved to a new house elsewhere in the UK, leaving the original house empty. She sold the first house for £246,000 on 31st December 2020. Calculate Charlotte’s chargeable gain on the house.
Robert and Majorie Wake owned land that they used as both a cattle ranch and a farm. Each spring and autumn, the Wakes would drive their cattle from the ranch portion of the operation across an access road on the farm- land to Butler Springs, which was also on the farmland.In December 1991, the Wakes sold the farm to Jesse and Maud Hess but retained for themselves a right-of-way over the farm access road and the right to use Butler Springs for watering their livestock. In 1998, the Hesses sold the farm to the Johnsons, granting them uninterrupted possession of the property “excepting only that permissive use of the premises” owned by the Wakes. The Wakes continued to use the access road and Butler Springs until 1999, when they sold their ranch and granted the new owners “their rights to the water of Butler Springs,” but they said nothing about the access road.The ranch was subsequently sold several times and all the owners used the access road and watering hole. In 2013, the Nelsons…
The City of Prattville donated some land with a few old manufacturing buildings on it to the Laurel Corporation that was only worth $50,000. The Laurel Corporation owns the television show, Home Renovations that builds beautiful condominiums from old manufacturing buildings and then sells them to young wealthy accountants. They film in Prattville for two months investing 2 million dollars in the complex. What basis does Laurel Corporation have in the condominium complex?
Raul Martinas, a professor of languages at Eastern University, owns a small office building adjacent to the university campus. He acquired the property 10 years ago at a total cost of $608,500-that is, $78,500 for the land and $530,000 for the building. He has just received an offer from a realty company that wants to purchase the property: however, the property has been a good source of income over the years, and so Martinas is unsure whether he should keep it or sell it. His alternatives are as follows: a Keep the property. Martinas's accountant has kept careful records of the income realized from the property over the past 10 years. These records indicate the following annual revenues and expenses: Martinas makes a $13,250 mortgage payment each year on the property The mortgage will be paid off in eight more years. He has been depredating the building by the straight-line method, assuming a salvage value of $79,500 for the building, which he still thinks is an appropriate figure. He…
Mrs. Wyatt owns a building used to run her business. Mrs. Wyatt sells the building for $500,000. The building had a basis of $250,000. Within 2 weeks, Mrs. Wyatt uses the cash from the sale of her building to purchase a new building for $400,000. This building will also be used for her business. (1) What options are available to Mrs. Wyatt? She can (2) If Mrs. Wyatt desires to maximize the amount of gain she defers, which of the options is best for her? (3) Based on (2) above, how much gain would Mrs. Wytt recognize this year and how much gain would she defer?