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LPC Law Notes > Business Law and Practice Notes
A more recent version of these Corporation Tax notes – written by Cambridge And Oxilp And College Of Law students – is available here.
The following is a more accessble plain text extract of the PDF sample above, taken from our Business Law and Practice Notes. Due to the challenges of extracting text from PDFs, it will have odd formatting:
Corporation tax Calculate the Chargeable Gains
1) Is it a capital asset that is being sold?
Capital receipts and expenditure arise from one-off transactions
2) Proceeds of sale of asset /
market value of an asset
Calculation
Total sale proceeds received for sale of asset
PS100,000
Sale proceeds includes:
1) Sale of any capital asset
2) The market value of an asset if it is transferred to a connected person for below market value
3) Net sale proceeds
Calculation
Sale proceeds (2) MINUS Incidental costs of disposal
PS100,000 - PS2000 = PS98,000
4) Total chargeable gain
Incidental costs of disposal includes:
1) Agent's commission for sale of the asset
Calculation
Net sale proceeds (3) MINUS initial expenditure MINUS subsequent expenditure
PS98,000 - PS8000 and PS20,000 = PS70,000
Initial expenditure includes
1) The initial2) cost
[Allowable of the asset expenditure]
when purchased
2) Incidental costs of acquisition
Subsequent expenditure includes
1) Expenditure on the asset which enhances its value
*
Doesn't include if the item is damaged and the costs that are incurred repairing it
2) Expenditure incurred in establishing, preserving or defending the title of the asset
5) Indexed gain
Calculation
Total capital proceeds (4) Minus indexation allowance
PS70,000 - PS10,000 = PS60,000
6) Taxable chargeable gain
Indexation allowance includes
1) Will be told 2) in
[Allowable question expenditure]
Calculation
Indexed gain (5) Minus losses
PS60,000 - PS5,000 = PS55,000
Losses includes
Trading losses in this year
*
Can be applied to capital and trading profits
*
Can be offset against:
a) Profits incurred in THIS accountancy year Unused trading losses b) Profits incurred in the PREVIOUS accountancy year Unused trading losses c) Profits incurred in FUTURE accountancy years
Capital losses in this year
*
Can be applied only to capital profits
*
Can be offset against:
a) Profits incurred in THIS accountancy year Unused trading losses b) Profits incurred in FUTURE accountancy years
Buy the full version of these notes or essay plans and more in our Business Law and Practice Notes.
