Problem:
Because of financial difficulties Simon was forced to dispose of the following asset: He bought an investment property for $660,000 in March 1997. He rented out the property for 5 years and each year he made a rental loss of $2,750 which he claimed as an allowable income tax deduction. He carried out an improvement on the property by adding an extra room at a cost of $178,650 in October 2010 He Managed to sell it for $1,045,000 and signed the contract on 10 May 2018. Settlement date was 31 August 2018. His selling costs were $22,000 He also has a capital loss made in 2016 from the sale of his jet ski of $19,690 He had purchased an antique manuscript which was the original diary of the famous composer Beethoven in 2002 for $7,500. He sold this manuscript in June 2018 for $50,000. He has carry forward collectable losses of $10,000 from the 2014/15 tax year. The CPI index number are: September 1999 is 68.7 March 1997 is 67.1 Required: Assuming Simon wants to minimize his tax liability, calculate his net capital gain or capital loss for the year ending 30 June 2018 using the most appropriate