James Saunders is an expert art dealer with galleries in Cape Town and Johannesburg.

During $2019$ year of assessment he made sales amounting to R$1200000.$ In the previous year, he had closing stock of art amounting to R$300000.$ His cost of sales amount in the income statement was R$600000.$ He also made purchases from his overseas suppliers amounting to R$500000.$ The following items were not included in these figures:

$$ An incompetent sales assistant spilt turpentine over a new crate of imported paintings from Italy. While James insisted that they were damaged beyond repair resulting in a loss to him of R$5000,$ the commissioner for SARS is refusing to allow the write$-$down.

$$ James took a painting from stock for his personal use in his home. The market value at that time was R$30000$ and that paintings had cost him R$24000.$

$$ James frames some of his purchased paintings if the artist cannot afford a decent frame. He purchased twenty frames for a total of R$20000$ during the year and had three frames on hand at the end of the year.

$2$

$$ During the year the also sold a few paintings to Matthew Proxenos, who is his brother$-$in$-$law, for R$4000$ when the market value was R$7500.$

$$ Operating expenses incurred during $2019$ year of assessment, all of which are deductible in terms of section $11($a$),$ amounted to R$120000.$

Ignore VAT.

Required:

$2\mathrm{.}1.$ Calculate James taxable income for the year of assessment ending February $2019.(15)$

$2\mathrm{.}2.$ Assume James sold the paintings that he took home during the year for R$50000,$ to

his sister, when the market value had risen to R$80000.$ Calculate his capital gains tax implications and clearly indicate with reasons the impact on taxable income $($if any$).(5)$