Page 28 - Chapters 17 & 18 - Dividends & Dividend Tax

Solution

(A) Normal tax consequences

Cash distribution – no tax consequences

Distribution of trading stock – deduction of 300 000

opening stock and recoupment at MV of R500 000 ito

s22(8)

Distribution of building – Disposal @ MV Proceeds =

MV of 1 500 000, less base cost of R1 200 000 =

Capital gain of R300 000 incl. @ 66.6% in taxable

income