Question 1 (5 Marks)The Lotteries Commission conducts an instant lottery called ‘Set for Life’ underwhich a winner who scratches three ‘set for life’ panels wins $50,000 each yearfor 20 years. The first $50,000 is payable as soon as the winner is notified, andlater amounts are payable on the first anniversary of the first payment. In theevent of the death of the winner, the Commission may pay any outstandingamounts to the deceased’s estate.Requirement:Is the annual payment income? Give reasons for your decisionQuestion 2 (06 marks)Corner Pharmacy is a chemist shop. It provides no credit sales but accepts majorcredit cards. It sells items off the shelf and the proprietor fills prescriptions forcash and for payments made under the Pharmaceutical Benefits Scheme [PBS].Three (03) assistants are employed. The following financial data is provided:Cash sales ——————————————–$300,000Credit card sales————————————-$150,000Credit card reimbursements ———————–$160,000PBS:– Opening balance ———————————–$25,000– Closing balance ————————————$30,000– Billings ———————————————-$200,000– Receipts ———————————————$195,000Stock– Opening stock————————————–$150,000– Purchases——————————————-$500,000– Closing stock —————————————$200,000Salaries ————————————————$60,000Rent —————————————————-$50,000Requirement:On the assumptions that an accrual basis applies and the cost of sales and otheroutlays are allowable deductions for tax purposes, calculate the pharmacy’staxable income.Question 3 (04 marks)What principle was established in IRC v Duke of Westminster  AC 1? Howrelevant is that principle today in Australia?Question 4 (05 marks)Joseph (an accountant) and his wife Jane (a housewife) borrowed money topurchase a rental property as joint tenants. They entered into a writtenagreement which provided that Joseph is entitled to 20% of the profits from theproperty and Jane is entitled to 80% of the profits from the property. Theagreement also provided that if the property generates a loss, Joseph is entitledto 100% of the loss. Last year a loss of $40,000 arose.Requirement:How is this loss allocated for tax purposes? If Joseph and Jane decide to sell theproperty, how would they be required to account for any capital gain or capitalloss?