Ben Briggs and Jonathan Mathew Case Study - Finance Assignment Help

Assignment Task :

QUESTION 1

Ben Briggs briefs his lawyer Tom Parker in relation to drafting a new will for the purpose of making provision for the following bequests: 

• an investment property originally acquired by Briggs on 3 January 1994 is to be left to his son, Bill; at the date of Briggs’ death the market value of the asset is $950,000

• investment shares should be held on trust for Briggs’ grandchildren; at the date of Briggs death the shares have a cost base of $150,000 and a market value of $400,000 

• a vacant block of land is to be transferred to the RSPCA; at the date of Briggs’ death the land has a cost base of $200,000 and its market value is $300,000; the land has been held for more than 12 months. 

Critically consider, briefly, the income tax implications of the above bequests on Briggs’ death.

QUESTION 2  

On 10 August 1985, Jonathan Mathew Manus inherited $1 300,000 in cash from the estate of his late paternal grandmother, Dame Judy Joanna Manus. Jonathan M. Manus used his inheritance to acquire the following assets: 

• a three-bedroom apartment in Sydney costing $ 500,000, which Manus subsequently used for the duration of the ownership as his home. Stamp duty of $23,750 was paid on 15 February 1986. The transfer costs and conveyancer’s fees, which totalled $ 2,500, were paid on completion, including the real estate agent’s fee of $20,000. Contracts were exchanged on 25 November 1985. Completion occurred on 20 April 1986. On taking possession of the property on 1 May 1986, Manus installed new carpets at a cost of $1,500 and painted the interior of the apartment at a cost of $1,800. Council rates cost $1,168 in total for the first year of ownership (due on the 31 August of each year of ownership), and thereafter rates increased each year by 2%, compounded monthly.

• an immaculately restored early model MG sports car for $30,000 on 1st March 2000.

• 20,000 ordinary shares in BRZ Ltd for $52,000 on the 1st September 1985. In March 1998, this company declared a 1 for 10 bonus issue payable to all shareholders from the company’s asset revaluation reserve. The paid-up value of each bonus share was $1 per share and its market value $3 per share. BRZ Ltd did not transfer any funds to the share capital account, and

• a Georgian lamp for $20, 000 (over a 100-years old) on 1 January 1996.

In December 1998, Manus signed a contract for a $400,000 extension to a factory he owned. Manus incurred legal costs of $1,500 in preparing the contract. The extension doubled the floor space of the factory. Manus had acquired the land and existing factory building for $800,000 in October 1986. Construction of the extension commenced in March 1999 and the job was completed by July 1999. Manus earned a rental income of $96, 000 from the factory for the tax year ending 30 June 2019. The above extension had enabled him to increase his rental income. The market value of the factory as at 30 June 2019 was $4 000, 000.

In February 2019, Manus had the opportunity to conclude a new business venture. To raise enough capital, he decided to sell the following assets in March 2019:

• The MG sports car for $42,000 and the Georgian lamp for $15,000.

• All his shares in BRZ for $6 per share and the Sydney apartment for $4 000,000.

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