Question

PLEASE HELP. I CANT THINK.

Discuss two types of capital gains, one being personal use property and one being listed personal property. Give examples of each and discuss ways the government might be able to determine if you included the correct amounts.

Answer 1

A.)Personal use property

1.Personal use property is a type of property that an individual does not use for business purposes or as an investment. Quite simply, individuals use personal use property primarily for the purposes of their own enjoyment.

2.Example of Personal use property can be household appliances, vehicles, electronics or clothing, etc.

3.Government won't prefer taxing capital gains arising from personal use property in many countries as it will always result in losses which will be a penalty to the government because the personal use property will always go through wear and tear and thus will not have realizable value greater than cost.

B.)Listed personal property

1.Listed personal property is a type of personal use property. The principal difference between listed personal property (LPP) and other personal use properties is that LPP usually increases in value over time.

2.Example of LLP can be Jewellery, coins, stamps, prints, etchings, drawings, paintings, sculptures, or other similar works of art, etc.

3.To determine the value of many LPP items, you can have them appraised by a dealer. You can also refer to catalogues for the value of the properties.

4.Government will be able to tax capital gains arising out of listed personal property as it may result into profit or loss as the case may be. Capital gain will be computed as follows: {Full value of consideration(Sales value received) - Cost of acquisition of the asset}.