CAF-2 · Chapter 11 · Question 2 of 15
During the tax year, Mr. A suffered a loss of Rs. 400,000 in a speculation business and earned a profit of Rs. 1,000,000 from a normal trading (non-speculation) business. How will the speculation loss be treated?
Test yourself: pick an answer
Reveal answer & explanation
Correct answer: C) C) It cannot be set off against normal business income and must be carried forward to be set off only against future speculation business profits.
Explanation
Loss in a speculation business cannot be set-off against any other income (including normal business income). It can only be carried forward up to six tax years to be set off against future speculation gains.
More Losses, Deductible Allowances, Tax Credits and Exemptions MCQs
- Q4XYZ Associates is an Association of Persons (AOP). During the tax year, the AOP incurred a business loss of Rs. 1 million. How will this…
- Q5When computing a person's taxable income, which of the following deductions or losses must be taken into account LAST?
- Q6Mr. Y has a taxable income of Rs. 1,400,000. He paid tuition fees of Rs. 500,000 for his three children during the tax year. What is his…
- Q7Mr. Z, an individual, makes a donation via crossed cheque to an approved non-profit organization which is an *associate* of Mr. Z. His…
- Q8If a taxpayer is eligible for multiple tax credits in a tax year, in what mandatory order must they be applied against the gross tax…