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KINGS OWN INSTITUTE
ACC708 Taxation Law
T120
Take-Home Final Examination
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Institution
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Taxation 2
SECTION A (20 Marks)
Baldrick bought an investment property on 1 July 2018 for $2,000,000. He rented out his
property from 1 July 2018. He borrowed $1,800,000 on the same day from the bank to buy the
property. The term of the loan was 8 years. The building was originally constructed in 2001 at a
cost of $900,000. He received rent in cash from his tenants during the year ended 30 June 2019
in the amount of $93,000. Included in this amount was a payment of $9,000 on 30 June 2019 as
rent for the month of July 2019. Baldrick incurred the following expenses during the year ended
30 June 2019 in relation to the property:
State Government Land Tax $22,500
Loan Repayments ($52,000 principal and $130,000 interest) $182,000
Real Estate Agent’s fee to evict a tenant for non-payment of rent $2,300
The front window was badly damaged at the time of acquisition and replaced on 4 July
2018 $2,800
A new refrigerator was purchased on 1 March 2019 $3,800
Loan application fee (paid on 1 July 2018) $2,000
Legal costs for the loan to buy the property (paid on 1 July 2018) $2,600
Legal costs for buying the property (paid on 1 July 2018) $4,600
Stamp duty on the purchase of the property (paid on 1 July 2018) $95,000
Baldrick wants to minimize his taxable income for this year. Assume all depreciating assets, if
any, have an effective life of 6 years. He does not wish to use the SBE election.
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KINGS OWN INSTITUTE ACC708 Taxation Law T120 Take-Home Final Examination Name Institution Date Taxation 2 SECTION A (20 Marks) Baldrick bought an investment property on 1 July 2018 for $2,000,000. He rented out his property from 1 July 2018. He borrowed $1,800,000 on the same day from the bank to buy the property. The term of the loan was 8 years. The building was originally constructed in 2001 at a cost of $900,000. He received rent in cash from his tenants during the year ended 30 June 2019 in the amount of $93,000. Included in this amount was a payment of $9,000 on 30 June 2019 as rent for the month of July 2019. Baldrick incurred the following expenses during the year ended 30 June 2019 in relation to the property: • State Government Land Tax $22,500 • Loan Repayments ($52,000 principal and $130,000 interest) $182,000 • Real Estate Agent’s fee to evict a tenant for non-payment of rent $2,300 • The front window was badly damaged at the time of acquisition and replaced on 4 July 2018 $2,800 • A new refrigerator was purchased on 1 March 2019 $3,800 • Loan application fee (paid on 1 July 2018) $2,000 • Legal costs for the loan to buy the property (paid on 1 July 2018) $2,600 • Legal costs for buying the property (paid on 1 July 2018) $4,600 • Stamp duty on the purchase of the property (paid on 1 July 2018) $95,000 Baldrick wants to minimize his taxable income for this year. Assume all depreciating assets, if any, have an effecti ...
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