Page 27 - P6 Slide Taxation - Lecture Day 4

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