Planit:Singapore Sale of a Business Exercise Answer Key

From Planipedia

This case study is specific to financial planning in Malaysia, so has fixed values rather than indices by country. For a similar case study applicable to other case studies, please see Planit:Canadian Sale of a Business Exercise Answer Key, Planit:UK Sale of a Business Exercise Answer Key, or Planit:Malaysian Sale of a Business Exercise Answer Key.

Question One:

45-year old Kathy Black owns a small Spa with an ACB of $100,000 that she plans to sell when she retires at age 60. The business is currently worth $460,000. She expects the business will grow at a rate of 5.0% every year. What would you put into the following data fields on the detailed Pensions screen?

To Year:____

Percent Taxable:____%

% Amount on Death:____%

Model As:____

Answer:

Amount Per Year: $10 million Index Rate: 4.0% Percent Taxable: 100% (The business will be strictly liable as Singapore income tax. So, 100% of this revenue should be included in Singapore income tax calculations for that year). Amount on Disability: 100% Model As: Defer with Retirement (If the client chooses to delay retirement, both the From Year and To Year fields will be delayed as well). The other fields should be entered as follows: Owner: Client; From Year: 15 years from the current year, when the client retires at 60; To Year: 15 years from now since it is a one-time revenue; Amount on Death: 100%.