Sam is your client and has come to you to prepare his tax return....

Question

# Sam is your client and has come to you to prepare his tax return....

Sam is your client and has come to you to prepare his tax return. During the 2019-20 financial year, Sam has disposed of the following assets:

1. Sam purchased a yacht in May 2017 from an auction warehouse for \$25,000. Sam has spent \$35,000 on improvements to the yacht. In June 2020, Sam sells the yacht for \$45,000.
2. Sam purchased a vacant block of land in May 1991 for \$250,000. In April 1998 Sam subdivides the vacant block of land into two equal portions. The value of the portion is \$200,000 each. In May 2020, Sam sold one of the vacant blocks of land for \$300,000
3. Sam acquired block of land for \$80,000 on the 10th October 1978. On the 20th June 1990 Sam builds a house on the same block of land for \$550,000. In 10th May 2020 Sam sales the house and the land for \$850,000. During the period 20th June 1990 and 10th May 2020 the property was rented to an unrelated party.

Required:

Calculate Sam's Capital Gain, subject to Tax for the year ending 30th June 2020. Justify your calculations using legislation and case law.

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