Required: Discuss the CGT consequences of the following for Alicia (for every instance where there is a capital gain, also include a discussion regarding whether the 50% discount is applicable). Cite authority In the current tax year, the following facts are relevant for Alicia, who is a self-employed psychiatrist: Alicia had a motorcycle, which she used as her main form of personal transport, stolen from her home. Although it was worth $40,000 at the time of the theft, insurance only paid her out $30,000. Alicia had bought the motorcycle 2 years earlier for $20,000. Alicia owned an investment property and during the tax year she renewed the lease for her tenants. The tenants were so keen for a new lease that, in addition to the rent, they gave her an up-front lump sum of $20,000 at the commencement of the renewal. The three year lease for the premises that Alicia used to see patients had expired. She had paid $40,000 up-front premium when she entered this lease three years earlier. Alicia owned a vacant piece of land. Her plan was to construct an office building on this land, which would then be rented out to a business, Y Ltd. Y Ltd paid Alicia $50,000 in exchange for her written commitment to commence building the office building earlier than expected, as Y Ltd would like to move into it as soon as possible (assume this $50,000 was not ordinary income)

SWFT Essntl Tax Individ/Bus Entities 2020

23rd Edition

ISBN:9780357391266

Author:Nellen

Publisher:Nellen

Chapter8: Property Transactions: Capital Gains And Losses, Section 1231 And Recapture Provisions

Section: Chapter Questions

Problem 30P

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Required: Discuss the CGT consequences of the following for Alicia (for every instance where there is a capital gain, also include a discussion regarding whether the 50% discount is applicable). Cite authority

In the current tax year, the following facts are relevant for Alicia, who is a self-employed psychiatrist:

Alicia had a motorcycle, which she used as her main form of personal transport, stolen from her home. Although it was worth $40,000 at the time of the theft, insurance only paid her out $30,000. Alicia had bought the motorcycle 2 years earlier for $20,000.
Alicia owned an investment property and during the tax year she renewed the lease for her tenants. The tenants were so keen for a new lease that, in addition to the rent, they gave her an up-front lump sum of $20,000 at the commencement of the renewal.
The three year lease for the premises that Alicia used to see patients had expired. She had paid $40,000 up-front premium when she entered this lease three years earlier.
Alicia owned a vacant piece of land. Her plan was to construct an office building on this land, which would then be rented out to a business, Y Ltd. Y Ltd paid Alicia $50,000 in exchange for her written commitment to commence building the office building earlier than expected, as Y Ltd would like to move into it as soon as possible (assume this $50,000 was not ordinary income)

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