Katie's brother died in March 2020, and as a result, at that time, she inherited the following assets from her brother: A house (House A) purchased by her brother in June 2010, which had been used by her brother as his main residence. In her brother's hands, the cost base was $400,000. Market value in March 2020 was $1,000,000. • A house (House B) purchased by her brother in July 2012 and used by him as an investment property. In her brother's hands, the cost base was $700,000. Market value during March 2020 was $800,000. Katie initially rents out both houses, and then makes the following sales during January 2021: House A: sold for $1,100,000 House B: sold for $950,000
Katie's brother died in March 2020, and as a result, at that time, she inherited the following assets from her brother: A house (House A) purchased by her brother in June 2010, which had been used by her brother as his main residence. In her brother's hands, the cost base was $400,000. Market value in March 2020 was $1,000,000. • A house (House B) purchased by her brother in July 2012 and used by him as an investment property. In her brother's hands, the cost base was $700,000. Market value during March 2020 was $800,000. Katie initially rents out both houses, and then makes the following sales during January 2021: House A: sold for $1,100,000 House B: sold for $950,000
Chapter12: Nonrecognition Transactions
Section: Chapter Questions
Problem 40P
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![Required: Discuss the CGT consequences regarding Katie selling the 2 houses. Where
applicable, discuss if the 50% discount is available (4 marks).
Katie's brother died in March 2020, and as a result, at that time, she inherited the
following assets from her brother:
A house (House A) purchased by her brother in June 2010, which had been used
by her brother as his main residence. In her brother's hands, the cost base was
$400,000. Market value in March 2020 was $1,000,000.
A house (House B) purchased by her brother in July 2012 and used by him as an
investment property. In her brother's hands, the cost base was $700,000. Market
value during March 2020 was $800,000.
Katie initially rents out both houses, and then makes the following sales during January
2021:
House A: sold for $1,100,000
• House B: sold for $950,000](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F151a7d16-9058-4b55-a53a-667c0df61158%2F852b5f63-186e-42cd-9368-ba4a06ff33be%2Fuix90g8_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Required: Discuss the CGT consequences regarding Katie selling the 2 houses. Where
applicable, discuss if the 50% discount is available (4 marks).
Katie's brother died in March 2020, and as a result, at that time, she inherited the
following assets from her brother:
A house (House A) purchased by her brother in June 2010, which had been used
by her brother as his main residence. In her brother's hands, the cost base was
$400,000. Market value in March 2020 was $1,000,000.
A house (House B) purchased by her brother in July 2012 and used by him as an
investment property. In her brother's hands, the cost base was $700,000. Market
value during March 2020 was $800,000.
Katie initially rents out both houses, and then makes the following sales during January
2021:
House A: sold for $1,100,000
• House B: sold for $950,000
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