Question

Pleasant place plc is contemplating as to whether to invest in a hotel or tourism business. the chairman of the company has approached you this morning for assistance on the tax implications with respect to the two businesses for his final decision.

the companies' projected income and expenditure for year one is as follows;
                                      ABS Ltd (HOTEL)              CDS Ltd (TOURISM)
                                               $                                                 $
         Gross Profit.       1,000,000.                             1,000,000
         Expenditure.       670,000.                                 670,000

Relevant additional information:
A building to be bought on March 1, of year one for $400,000 had been granted full year's depreciation at the rate of 20% and same amount has been added to the projected cost above.

you are required as a tax manager to write a briefing note to advice the chairman on what business to invest in, with the necessary appendix.

attached journal or article references

Answer 1