1.1 REQUIRED: (8 marks)

Discuss if each of the following amounts will be included in Jamie Ramseys income as defined.

INFORMATION: Jamie Ramsey had for many years operated a successful catering business. He had traded in his own name. The business comprised two separate divisions:

a restaurant business, and

a fast-food take-away business.

For the past five years Jamie Ramseys two sons helped him run the business. On 1 March 2017 Jamie split his business into the two divisions:

He sold his restaurant business to Gino, his older son and

he sold his fast-food take-away business to Fred, his younger son.

Gino agreed to pay Jamie Ramsey R20 000 a year for 10 years as the purchase consideration for the restaurant business. Fred agreed to pay R200 000 for the fast-food take-away business. They then agreed that the R200 000 would be settled in eight equal instalments of R25 000 each, with an instalment being paid each year.