NB: Please note to write a one page summary of the case in the attached document. Case SummaryIn Mason v Innes, the taxpayer had been a novelist for manyyears, and his works had published on a regular basis ataround two-year intervals. On 4 April 1960, he gave his fatherhis rights (worth £15,425) in a novel released the followingOctober and based on information obtained during a journeyto the Persian Gulf in 1953. His earnings were calculated on acash basis for income tax reasons, and he was entitled todeduct costs made in the production of the novel, includingthe cost of his trip to the Persian Gulf.For 1960-61, the taxpayer was assessed income tax on thepremise that the market value of the rights issued as indicatedshould be brought in as a receipt of his profession. While thetaxpayer's authoring of the novel and disposal of the rightstherein happened in the course of his profession, the SpecialCommissioners ruled that those rights were not stock-in-trade,and so the Sharkey v Wernher ruling did not apply.SignificanceMason v Innes [1967] establishes that if a person works in aprofession, he or she must:• while doing that occupation, produces literary, artistic, orother work; andDisposes of the rights to the work in any way other thanin the course of the profession, by gift or for a sum lessthan market value, before or after it is completed.The difference between the market value and the disposalprice, or the market value of the present, cannot be deemed areceipt of the profession. The Sharkey v Wernher decisionfrom 1955, which dealt with trading stock disposed of otherthan via trade, and the sections that gave that judgementlegislative power, are inapplicable.However, any such disposition should be evaluated forpotential Capital Gains Tax implications.In any scenario where the implementation of the Mason vInnes judgement is in dispute, a report should be made toBusiness Profits, particularly if:• The rights in the literary, etc. work are promptly sold bythe receiver for a lump sum payment (rather than beingused as a source of revenue, as in Mason v Innes); or• evasion is suspected; or• It is argued that there is no Capital Gains Tax duty; orAny attempt is made to apply the ruling in Mason v Innesto the situation of a trader.

Innes wrote novels, many involving novel which released in October which was based on information of…

n Mason v Innes, the taxpayer had been a novelist for mar vears, and his works had published on a regular basis at round two-year intervals. On 4 April 1960, he gave his fat is rights (worth £15,425) in a novel released the following October and based on information obtained during a journe o the Persian Gulf in 1953. His earnings were calculated o cash basis for income tax reasons, and he was entitled to doduot modo in the nreduetion ofthe nouol ino inoludine

n Mason v Innes, the taxpayer had been a novelist for mar vears, and his works had published on a regular basis at round two-year intervals. On 4 April 1960, he gave his fat is rights (worth £15,425) in a novel released the following October and based on information obtained during a journe o the Persian Gulf in 1953. His earnings were calculated o cash basis for income tax reasons, and he was entitled to doduot modo in the nreduetion ofthe nouol ino inoludine

Practical Management Science

6th Edition

ISBN:9781337406659

Author:WINSTON, Wayne L.

Publisher:WINSTON, Wayne L.

Chapter2: Introduction To Spreadsheet Modeling

Section: Chapter Questions

Problem 20P: Julie James is opening a lemonade stand. She believes the fixed cost per week of running the stand...

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