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Corporation Tax Notes

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This is an extract of our Corporation Tax document, which we sell as part of our Business Law and Practice Notes collection written by the top tier of Cambridge And Oxilp And College Of Law students.

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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

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