Types of income considered tax exempt

Discuss the types of activities that are considered taxable and what types of income are considered tax exempted. (answer in your own words DO NOT copy from any source). (2 Marks)

Q2. Answer the following questions: (0.5 Mark each)

1. A taxpayer dispose of an asset by gift with a Cost base of 50000 SR. The market value of those assets at the time of disposal is 70000 SR. Required: What is gain or loss on the asset disposed of and determine whether or not the gain taxable and the loss deductible?

2. In 2015 a taxpayer purchased a piece of land for 100000 SR and in 2020; he incurred expenses of 30000 SR to improve the land. In 2020 he sold the land for 150000 SR. Required: What is gain or loss on the asset disposed of and determine whether or not the gain taxable and the loss deductible?

3. A taxpayer disposed a part of asset for 100000 SR in cash. The taxpayer purchased that asset for 90000 SR 5 years ago but the market value of the complete assets was as follows: Part disposed 100000 Retained part150000 Total250000 Required: Calculate the cost base of the disposed asset and the gain of the disposal.

4. In 2019 a taxpayer sold a merchandise for 100000 SR on credit but he did not report that sales in his tax return. In 2020 it is proved that impossibility of collecting receivable accounts. Required: Is taxpayer’s bad debt deductible or not?

5. In 2019 a taxpayer sold a merchandise for 100000 SR on credit and he reported that sales in his tax return. In 2020 it is proved that impossibility of collecting receivable accounts. Required: Is taxpayer’s bad debt deductible or not?

6. A taxpayer applied depreciation rates of 10% on his assets using straight-line method. While depreciation rate by tax law is 15%.

Required: What is the effect of that transaction on the tax base? Requirements: almost 200 for each Q The Assignment must be submitted on Blackboard (WORD format only) via allocated folder. Assignments submitted through email will NOT be accepted. Students are advised to make their work clear and well presented; marks may be reduced for poor presentation. This includes filling your information on the cover page. Students must mention question number clearly in their answer. Late submission will NOT be accepted. Avoid plagiarism the work should be in your own words copying from students or other resources without proper referencing will result in ZERO mark. No exceptions. All answered must be typed using Times New Roman (size 12 double-spaced) font. No pictures containing text will be accepted and will be considered plagiarism). Submissions without this cover page will NOT be accepted. ‘

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