Property Disposal – NBC Institute

AT – May 2024 – L3 – SC – Q6 – Capital Gains Tax

Prepare a report calculating Kanadu Nigeria Limited’s capital gains tax, undisposed property cost, roll-over relief, and tax payment due dates.

Question

Kanadu Nigeria Limited is a manufacturer of leather shoes, bags, and allied accessories since 2017. The recent changes in the taste of customers, particularly the quest for imported, cheaper leather shoes and bags, have had a negative impact on the company’s profits. The management has decided to re-organize the business in a way to better satisfy the customers.

The following transactions were extracted from the books of the company:

(i) June 2017: Acquisition of an acre of land at the outskirts of the State capital for N8,500,000. The company spent an additional amount of N1,500,000 to sand-fill the land;

(ii) August 2017: A factory was built on the acquired land for the purpose of the business at a cost of N65,000,000;

(iii) May 2022: Sold part of the factory’s land for N25,500,000;

(iv) The market value of the remaining property unsold, as valued by a professional valuer, at the time of disposal in May 2022, was N99,500,000;

(v) July 2023: Acquisition of a new acre of land in the town for N45,000,000 (utilized all the proceeds from the disposal of the land). This is expected to be used for the construction of another factory in the same line of business.

The company’s General Manager, who is an engineer, has just engaged your professional accounting firm as its tax consultants.

Required:

As the Principal Partner, you are to prepare a report to the General Manager, stating the:

a. Capital gains tax payable in line with the provisions of Capital Gains Tax Cap C1 LFN 2004 (as amended) (10 Marks)

b. New cost of undisposed property (2 Marks)

c. The roll-over relief (if any) the company is entitled to (2 Marks)

d. Due date(s) for the payment of tax liabilities (1 Mark)

(Total 15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital gains tax, Land Valuation, Payment Due Dates, Property Disposal, Roll-Over Relief, Tax Compliance
Level: Level 3

Topic: Capital Gains Tax (CGT)
Series: MAY 2024

ATAX – Nov 2018 – L3 – Q5 – Capital Gains Tax

Calculation of capital gains tax for properties sold, inherited, and acquired by the government, with tax authority determination.

Question

As a senior official in a firm of tax consultants, your tax manager has just discussed issues relating to one of your clients.

The summary of the discussion is as follows:

Mr. Eket, a native of Oron who resides in Uyo, Akwa Ibom State, owned two properties, one in Kano and the other in Benin. The property in Kano was built at a cost of N23 million, while that in Benin was acquired at a cost of N19.5 million. In the year 2012, the property in Kano was sold by Mr. Eket for N32 million, with disposal expenses amounting to N2.80 million.

In the year 2014, Mr. Eket died, and the property in Benin was transferred to his wife, Emem, by the executor of his will. The market value of the properties in Kano and Benin were N28 million and N23 million, respectively.

In October 2016, the property in Benin was acquired by the Edo State Government for highway construction, and a compensation of N27 million was paid to Emem.

Required:

(a) Determine the capital gains tax payable (if any).
(5 Marks)
(b) Determine the relevant tax authority to which the liability is due.
(5 Marks)
(c) Give reasons for the treatment in (a) and (b).
(5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital gains tax, Compensation, Highway Construction, Inheritance, Property Disposal, Tax authority, Transfer of Assets
Level: Level 3

Topic: Capital Gains Tax (CGT)

AT – May 2024 – L3 – SC – Q6 – Capital Gains Tax

Prepare a report calculating Kanadu Nigeria Limited’s capital gains tax, undisposed property cost, roll-over relief, and tax payment due dates.

Question

The following transactions were extracted from the books of the company:

(i) June 2017: Acquisition of an acre of land at the outskirts of the State capital for N8,500,000. The company spent an additional amount of N1,500,000 to sand-fill the land;

(ii) August 2017: A factory was built on the acquired land for the purpose of the business at a cost of N65,000,000;

(iii) May 2022: Sold part of the factory’s land for N25,500,000;

(iv) The market value of the remaining property unsold, as valued by a professional valuer, at the time of disposal in May 2022, was N99,500,000;

The company’s General Manager, who is an engineer, has just engaged your professional accounting firm as its tax consultants.

Required:

As the Principal Partner, you are to prepare a report to the General Manager, stating the:

a. Capital gains tax payable in line with the provisions of Capital Gains Tax Cap C1 LFN 2004 (as amended) (10 Marks)

b. New cost of undisposed property (2 Marks)

c. The roll-over relief (if any) the company is entitled to (2 Marks)

d. Due date(s) for the payment of tax liabilities (1 Mark)

(Total 15 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital gains tax, Land Valuation, Payment Due Dates, Property Disposal, Roll-Over Relief, Tax Compliance
Level: Level 3

Topic: Capital Gains Tax (CGT)
Series: MAY 2024

ATAX – Nov 2018 – L3 – Q5 – Capital Gains Tax

Calculation of capital gains tax for properties sold, inherited, and acquired by the government, with tax authority determination.

Question

As a senior official in a firm of tax consultants, your tax manager has just discussed issues relating to one of your clients.

The summary of the discussion is as follows:

In October 2016, the property in Benin was acquired by the Edo State Government for highway construction, and a compensation of N27 million was paid to Emem.

Required:

(a) Determine the capital gains tax payable (if any).
(5 Marks)
(b) Determine the relevant tax authority to which the liability is due.
(5 Marks)
(c) Give reasons for the treatment in (a) and (b).
(5 Marks)

Answer

Find Related Questions by Tags, levels, etc.

Tags: Capital gains tax, Compensation, Highway Construction, Inheritance, Property Disposal, Tax authority, Transfer of Assets
Level: Level 3

Topic: Capital Gains Tax (CGT)

Question Tag: Property Disposal

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AT – May 2024 – L3 – SC – Q6 – Capital Gains Tax

Prepare a report calculating Kanadu Nigeria Limited’s capital gains tax, undisposed property cost, roll-over relief, and tax payment due dates.

ATAX – Nov 2018 – L3 – Q5 – Capital Gains Tax

Calculation of capital gains tax for properties sold, inherited, and acquired by the government, with tax authority determination.

AT – May 2024 – L3 – SC – Q6 – Capital Gains Tax

Prepare a report calculating Kanadu Nigeria Limited’s capital gains tax, undisposed property cost, roll-over relief, and tax payment due dates.

ATAX – Nov 2018 – L3 – Q5 – Capital Gains Tax

Calculation of capital gains tax for properties sold, inherited, and acquired by the government, with tax authority determination.

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AT – May 2024 – L3 – SC – Q6 – Capital Gains Tax

Prepare a report calculating Kanadu Nigeria Limited’s capital gains tax, undisposed property cost, roll-over relief, and tax payment due dates.

You're reporting an error for "AT – May 2024 – L3 – SC – Q6 – Capital Gains Tax"

ATAX – Nov 2018 – L3 – Q5 – Capital Gains Tax

Calculation of capital gains tax for properties sold, inherited, and acquired by the government, with tax authority determination.

You're reporting an error for "ATAX – Nov 2018 – L3 – Q5 – Capital Gains Tax"

AT – May 2024 – L3 – SC – Q6 – Capital Gains Tax

Prepare a report calculating Kanadu Nigeria Limited’s capital gains tax, undisposed property cost, roll-over relief, and tax payment due dates.

You're reporting an error for "AT – May 2024 – L3 – SC – Q6 – Capital Gains Tax"

ATAX – Nov 2018 – L3 – Q5 – Capital Gains Tax

Calculation of capital gains tax for properties sold, inherited, and acquired by the government, with tax authority determination.

You're reporting an error for "ATAX – Nov 2018 – L3 – Q5 – Capital Gains Tax"

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