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please help Mick disposed of the following assets during the tax year 2020/21: (1) On 19 May 2020, Mick sold a freehold warehouse for 522,000.
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Mick disposed of the following assets during the tax year 2020/21: (1) On 19 May 2020, Mick sold a freehold warehouse for 522,000. The warehouse was purchased on 6 August 2003 for 258,000 and was extended at a cost of 99,000 during April 2005. In January 2009, the floor of the warehouse was damaged by the flooding and had to be replaced at a cost of 63,000. The warehouse was sold because it was surplus to the business's requirements as a result of Mick purchasing a newly built warehouse during 2019. Both warehouses have always been used for business purposes in the wholesale business run by Mick as a sole trader. (2) On 24 September 2020, Mick sold 700,000 1 ordinary shares in Rolling Ltd, unquoted trading company, for 3,675,000. He had originally purchased 500,000 shares in Rolling Ltd on 2nd June 2007 for 960,000. On 1 December 2012, rolling Ltd made a 3 for 2 bonus issues. Mick has been a director of rolling Ltd since 1 January 2007. Required: (a) Assuming that no reliefs are available, calculate the chargeable gain arising from each of Mick's asset disposals during the tax year 2020/21. Note. You are not required to calculate the taxable gains or the amount of tax payable. (6 marks) (b) State which capital gains tax reliefs might be available to Mick in respect of each of his disposals during the tax year 2020/21, and what further information you would require in order to establish if the reliefs are actually available and to establish any restrictions as regards to the amount of relief. (8 marks) Note. For this part of the question, you are not expected to perform any calculations. (TOTAL = 14 marks) Step by Step Solution
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