Harald Dunn and his wife Evadne operate a successful snack packaging business, H
ID: 340899 • Letter: H
Question
Harald Dunn and his wife Evadne operate a successful snack packaging business, Healthy Snacks. The bulk buying of the raw materials (nuts, dried fruits, etc), the packaging and delivery to corporate area shops are done by the members of the family.
The accounts for Mr. Dunn’s business at 31st December 2014 showed a profit of $4,500,000 after charging:
1. $180,000 depreciation of equipment and office furniture;
2. $750,000 for salary to his wife Evadne who supervises the office, $496,000 to his 18 year old son Shane, and $1,720,000 to himself.
3. $78,000 interest on a loan he had obtained to expand his business 3 years ago
What is Harold Dunn's Income Tax liability statement for the year of 2014?
Shane is a part-time student at a University. What is his tax liability, if any?
Explanation / Answer
Answer
Harold Dunn's Income Tax liability statement for the year of 2014:
Working:
Allowable Expense
A.depreciation of equipment and office furniture
B.Salary to wife
C.Salary to self
D.interest on a loan
Non Allowable Expense
A.Salary to son
Particulars Amount Profit $4,500,000 Add:Salary to son $496,000 Taxable Income $4996000 Tax rate 34% Tax liability $1698640Related Questions
drjack9650@gmail.com
Navigate
Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.