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tax rate 8.25% in first 2 million

excess 16.5%

2. Mr Lin, Mr To and Mr Sze have been carrying on a partnership business in Hong Kong for many years. Before 1 October 2019, they shared profits and losses equally. Mr Sze retired from the partnership on 1 October 2019, and the new profit and loss ratio became: Mr Lin - 60%, Mr To - 40%. The partnership closes its accounts to 31 December each year. The following information was reflected in the profit and loss account of the business for the year ended 31 December 2019: (1) Net loss for the year ($ 135,000) (2) Partners' salaries charged in accounts: Mr Lin Mr Lin's wife Mr To Mr Sze (up to 30 September 2019) 180,000 40,000 174,000 30,000 (3) Rent $ 200,000 The business premises was owned by Mr Lin's wife. The assessable value of the premises for property tax purposes was $ 200,000 for the year of assessment 2019/20 and property tax of $ 24,000 was paid by her. Other information: Mr Lin elected for personal assessment for the year of assessment 2019/20. (2) The partners had the following losses brought forward from the year of assessment 2018/19 Mr Lin Mr To Mr Sze (140,000) (30,000) (10,000) Required: a. Compute the assessable profits (losses) of the partnership business for the year of assessment 2019/20. b. Compute the profits tax payable by the partnership for the year of assessment 2019/20. Ignore provisional profits tax. C. Prepare a statement of loss for the partnership for the year of assessment 2019/20. d. State the situations where the allocation of profits or losses are necessary in a partnership (which is not an illegal partnership). All workings must be shown. 2. Mr Lin, Mr To and Mr Sze have been carrying on a partnership business in Hong Kong for many years. Before 1 October 2019, they shared profits and losses equally. Mr Sze retired from the partnership on 1 October 2019, and the new profit and loss ratio became: Mr Lin - 60%, Mr To - 40%. The partnership closes its accounts to 31 December each year. The following information was reflected in the profit and loss account of the business for the year ended 31 December 2019: (1) Net loss for the year ($ 135,000) (2) Partners' salaries charged in accounts: Mr Lin Mr Lin's wife Mr To Mr Sze (up to 30 September 2019) 180,000 40,000 174,000 30,000 (3) Rent $ 200,000 The business premises was owned by Mr Lin's wife. The assessable value of the premises for property tax purposes was $ 200,000 for the year of assessment 2019/20 and property tax of $ 24,000 was paid by her. Other information: Mr Lin elected for personal assessment for the year of assessment 2019/20. (2) The partners had the following losses brought forward from the year of assessment 2018/19 Mr Lin Mr To Mr Sze (140,000) (30,000) (10,000) Required: a. Compute the assessable profits (losses) of the partnership business for the year of assessment 2019/20. b. Compute the profits tax payable by the partnership for the year of assessment 2019/20. Ignore provisional profits tax. C. Prepare a statement of loss for the partnership for the year of assessment 2019/20. d. State the situations where the allocation of profits or losses are necessary in a partnership (which is not an illegal partnership). All workings must be shown

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