Question 4 [12 Marks] Study the following case studies independently and answer the question that follows. I. Chris, aged 55 , runs a sole trader business and recently decided to retire early and sell his business to spend time with his grandkids. He wanted to sell his business for a one-million-rand lump sum and could not find a willing buyer to pay this amount. He sold his business to a friend Lydia, who paid him a cash amount of R400 000 and undertook to settle the balance by paying him R10 000 per month for the rest of his life. II. Anne, who was a guesthouse manager in Cape Town, inherited a house on the death of her aunt. The house is located in Durban, and she has no wish to relocate and live in Durban. She decided to list the property for sale, and much to her delight, the property was sold within a week. She received R1 000000 from the sale of the house. III. Alvis is a car dealer with 20 demo cars in his showroom. The arrival of new models required space, and Alvis decided to sell 4 of his demo cars at a discounted price of R200 000 for each vehicle. All four cars were sold during the same tax period. IV. Gibson loves dogs and purchased 2 German Shepherd dogs in July 2017 for R6 000 each. In September 2022, the dogs had eight puppets. Gibson decided to keep two puppets and sold the other six for R32 000 in total during the same tax period. V. Siya, who is a financial broker, was an owner of a restaurant bar in the city of Johannesburg. A large restaurant chain approached him to sell his restaurant, and he accepted the offer. The deal was for R800 000, and the sale price was made of trading stock worth R250 000, fixed assets valued at R300 000, and goodwill of R250 000. In terms of the sale agreement, the amounts for fixed assets and trading stock were to be paid in cash on signing, while goodwill will be paid in annual instalments of R35 000 for the rest of his life. Required: Examine the above scenarios with reference to the gross income definition, and advise which amounts will be included or excluded as part of gross income. 8 HIT1181-Jul-Dec2023-FA1-AM-V3-10072023 Question 3 [15 Marks] Your uncle, David, heard that you are studying a taxation module and requests your assistance in calculating his taxable income for the financial year ending 28 February 2023. You are presented with the following information in relation to David: - David was 41 years old on 28 February 2023 and was an ordinary resident in South Africa during the 2023 tax period. - David received R40 000 in interest on his Capitec bank fixed savings account and R8 000 on his USA fixed savings account. - On 31 August 2022, David was retrenched by his employer. He received a salary of R110 000 from 01 March 2022 to 31 August 2022. - David submitted a claim with the Unemployment Insurance Fund (UIF). David received, in total, R35 000 on 30 October 2022. - David purchased an annuity on May 2022 for R20 000. In terms of his contract, he received an annuity of R300 from the end of November 2022, and this monthly annuity would run for a period of seven years. - On 01 June 2022, David received dividends of R7 000 from a JSE-listed company. Required: Calculate the taxable income of David for the financial year ending 28 February 2023