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PART A Jack Brown, a resident of the Republic, has been achieving a reasonable return from the letting of a block of 1 5 flats
PART A
Jack Brown, a resident of the Republic, has been achieving a reasonable return from the
letting of a block of flats that he purchased in He does not have a history of
property dealing.
Jack is aware that he can make a substantial profit by selling the flats individually. He has
made application for a sectional title register to be opened.
To make the flats more attractive to would wouldbe purchasers, Jack is considering
improving them.
Required: Discuss with reasons whether Jack Browns receipt or accrual from the sale of
the flats is of a revenue nature. Deal with the position when the flats are sold individually
without improvements being made to them, and the position when the flats are first
improved, and then sold. marks
PART B
Berea Football Pty Limited, a resident of the Republic, owns the Berea football team. It
recently sold two of its players, namely, Ace Ball and King Foot to Westville Football Pty
Limited.
Ace Ball was sold by Berea Football Pty Limited for R and King Foot was sold for
R
Ace Ball has started playing for the Berea football team eight years ago in its under team and, after signing a lifeservice contract, had been trained by Berea Football
Pty Limiteds trainers until he was considered to be the number one striker in the
country.
King Foot had been snapped up by Berea Football Pty Limited at a bargain price
from Hasbeen Football Club for R When purchasing King Foot, its board of
directors realized he would not suit its style of play, but anticipated being able to sell
him at a quick profit. This it succeeded in doing, only eight weeks after purchasing
him.
Required: Discuss what amount, if any Berea Football Pty Limited must include in its gross
income. Assume that the receipts and accruals of Berea Football Pty Limited are not
exempt from normal tax and ignore a possible inclusion in its taxable income under
section A being a taxable capital gain marks
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