On 1 April 2020, Henry signed a lease with Honest Properties Ltd for a retail shop...
Fantastic news! We've Found the answer you've been seeking!
Question:
Transcribed Image Text:
On 1 April 2020, Henry signed a lease with Honest Properties Ltd for a retail shop in a new regional shopping centre. The lease was $4,000 per month and operated for two years from 1 May 2020. Henry also had to pay an up-front premium to Honest Properties Ltd of $2,000. However, due to building difficulties, on 28 April 2021 Honest Properties Ltd sought a variation on the lease, of a deferment of the lease for one month, and required Henry to move to another shop elsewhere in the shopping centre. As a result of this, Henry received $5,000 and one month's rent free from Honest Properties Ltd in consideration for agreeing to vary the terms of the lease. Question Assuming Honest Properties Ltd are builders and only occasionally lease property, advise both the lessor and lessee of the tax consequences of the transaction. On 1 April 2020, Henry signed a lease with Honest Properties Ltd for a retail shop in a new regional shopping centre. The lease was $4,000 per month and operated for two years from 1 May 2020. Henry also had to pay an up-front premium to Honest Properties Ltd of $2,000. However, due to building difficulties, on 28 April 2021 Honest Properties Ltd sought a variation on the lease, of a deferment of the lease for one month, and required Henry to move to another shop elsewhere in the shopping centre. As a result of this, Henry received $5,000 and one month's rent free from Honest Properties Ltd in consideration for agreeing to vary the terms of the lease. Question Assuming Honest Properties Ltd are builders and only occasionally lease property, advise both the lessor and lessee of the tax consequences of the transaction.
Expert Answer:
Answer rating: 100% (QA)
Tax consequences for the lessor Lease premium The lease premium of 2000 is a capital receipt and is ... View the full answer
Related Book For
Smith and Roberson Business Law
ISBN: 978-0538473637
15th Edition
Authors: Richard A. Mann, Barry S. Roberts
Posted Date:
Students also viewed these accounting questions
-
The organization you work for (staffing agency) is developing a new product. Review the characteristics of each project management structure, identify the one that most resembles your current...
-
Managing Scope Changes Case Study Scope changes on a project can occur regardless of how well the project is planned or executed. Scope changes can be the result of something that was omitted during...
-
Mabati Ltd is expected to pay a DPS of Sh.6 in one year's time. The dividend payout ratio is 60% and the Return on Equity is 15%. Using relevant calculations, determine whether the share is...
-
On February 1, 2020, Sheridan Company sells merchandise on account to Carla Vista Company for $6490. The entry to record this transaction by Sheridan Company is Sales Revenue Accounts Payable Notes...
-
A 1-L Thermos bottle is full of tea at 90C. You pour out one cup and immediately screw the stopper back on. Make an order-of-magnitude estimate of the change in temperature of the tea remaining in...
-
A two-tier system to repair bridge infrastructures is supported by two steel cables for each platform (Figure P5.15). All the support cables have a diameter of 0.50 in. Assume the applied loads are...
-
The controls in a computerized system are classified as: a. input, processing, and output. b. input, processing, output, and storage. c. input, processing, output, and control. d. input, processing,...
-
Romero Information Services, Inc., has two service departments: human resources and billing. Romeros operating departments, organized according to the special industry each department serves, are...
-
License plates in a particular state are to consist of 4 digits followed by 2 uppercase letters. a) How many different license plates can there be in this state if repetition of letters and numbers...
-
Diatomic nitrogen and oxygen molecules can stick to the surface of a container because of van der Waals forces. Assume that these molecules are stuck to the surface with binding energy...
-
How did South African music contribute to the struggle to end Apartheid and begin democracy for all South African people. How have film and other art forms made similar contributions to social and...
-
Below is the taxpayer information for Sharon and Robert Dolan. They have two children who lived with them, David ( SS# 1 5 4 - 1 3 - 5 8 2 6 ) , age 1 3 ( date of birth: October 1 1 , 2 0 1 0 ) ,...
-
Claire Stevens is 29 years old and single, lives in an apartment, and has one child dependent that lives with her full time from a prior relationship. Last year she earned $118,000 as a market...
-
Consider the situation shown in Figure 3. A 1000V rms source delivers power to a load. The load consumes 100 kW with a power factor of 25 percent lagging. a) Find the phasor I, assuming that the...
-
What in your opinion is the significance of Science and Magic in Islam. Write brief note on it.
-
Describe THREE (3) types of marketing channel systems. Provide relevant example for your answer. (15 marks) (b) Assume that you are a new customer relationship manager at Lotus supermarket. You need...
-
6. Cali Communications reported the following figures from its adjusted trial balance for its first year of business, which ended on July 31, 2018: (Click the icon to view the accounts and balances.)...
-
Below is a sample of the data in the file NFLAttendance which contains the 32 teams in the National Football League, their conference affiliation, their division, and their average home attendance....
-
Define a wholesale funds transfer and identify the parties to such a transfer.
-
The California Dental Association (CDA) is a voluntary nonprofit association of local dental societies to which some nineteen thousand dentists belong, about three-quarters of those practicing in the...
-
On April 29, 2010, Kirsten Fletcher and John E. Marshall III jointly signed a lease to rent an apartment for the term beginning on July 1, 2010, and ending on June 30, 2011, for a monthly rent of...
-
What is empowerment?
-
What is organizational politics?
-
____________ is the ability to control anothers behavior because, through the individuals efforts, the person accepts the desirability of an offered goal and a reasonable way of achieving it. (a)...
Study smarter with the SolutionInn App