Question 1

James is in a professional partnership. He has heard that he may be able to obtain real tax advantages (as well as considerable personal peace of mind) if he assigns (by gift) part of his interest in the partnership to his wife.   What would the tax consequences be for James of the proposed assignment?

(5 marks)

Question 2

Paul and Tina set up a partnership as anti-terrorism consultants on 1 July 2014. In their first year gross receipts amounted to $500,000. The firm’s outgoings included the following:

Expenses                                                                                          $150,000

Salary paid to Paul under the agreement                                               $50,000

Interest on Capital Contribution by Tina at 8% (as agreed)     $10,000

Separate loan by Tina to the partnership (at 10%)                    $20,000

The partnership agreement provides that the partners are to share the residue of profits after expenses (including all those set out above) equally.

Calculate the net income of the partnership for tax year 2014-2015 and each partner’s share of the net income of the partnership and their assessable income (you may assume that they have no income other than that they receive through the partnership).

(5 marks)

Question 3

Jane sold the following items on 30 June 2015:

1. her motor car – bought March 2010 for $15,000 and sold for $2,000;
2. her “home theatre” (comprising a smart television set and associated “surround sound” equipment) – bought in September 2013 for $10,000 and sold for $4,000;
3. an antique statuette – inherited from her grandmother in October 2014 with a market value of $6,000 and sold for $7,500;
4. a parcel of BHP shares – bought in April 2012 for $4,000 (plus $30 in brokerage and stamp duty) and sold for $5,000 (less $40 brokerage and stamp duty).

Assuming that she had a net capital loss of $500 at the end of tax year 2013/2014, calculate her net capital gain or loss for 2014/2015.                                                (10 marks)

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