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Dear Sir
You mentioned in an earlier post that proceeds from sale of business is not taxable, only profits are. In this case, are we ignoring the tax because there is no way to determine the profits from the sale?
Thanks.
I certainly do not say that proceeds from sale are not taxable – they might be.
However the problem here is that the only tax mentioned is 25% on taxable profits and not only do we not know what the profit on sale will be but we don’t know how Megaera treat proceeds of sale for tax purposes (or indeed whether they will be taxed).
We have no choice therefore but to assume that the proceeds are given after deducting any tax that might be payable.
(And I am surprised that the examiner has not written this as one of the assumptions in part (b) of the question – I certainly would mention it 🙂 )
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