Corporation Tax and Income Tax: tax treatment of appropriations to trading stock - pezewehemave.web.fc2.com

I have been asked to consider whether an election under S. At present I don't know the market value of the asset at the date of appropriation, but it could be more or less than historical cost.

S election - Election of transfer of investment property to trading stock | AccountingWEB

If the asset is standing at a large gain on appropriation, I think that I am right in saying that if an election is made, the debit to trading account is effectively indexed cost, this being the same as the market value less the gain.

If however the asset's market value is less than historical cost, how is indexation brought into the calculation?

The loss in the normal CGT computation will be market value less historical cost, with no indexation allowance. If an election is made, this would seem to lead to a situation where only historical cost is debited to trading account i.

Is this correct please or is it the case that some sort of notional loss including indexation is calculated for this purpose only?

Gone with the wind I have never been able to discover a special CGT rule for this situation so that, currently, indexation could augment the capital loss. Resources Podcasts About AccountingWEB Advertise on AccountingWEB Terms of use Privacy policy Contact us Got a question? Capital expenditure -immaterial items.

Budgeting dilemma on sales! My query relates to indexation allowance in the CGT computation on appropriation.

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