Budget 2017 - Appropriations to trading stock
In some instances a fixed asset can change its nature and becomes trading stock. For example, where land is held as an investment and a decision is made to build homes on the land for sale. This appropriation of a fixed asset to trading stock is treated as taking place at market value, and this can give rise to a chargeable gain or an allowable loss. However, an election can be made that has the effect of reducing the chargeable gain or allowable loss to zero, and rebasing the transfer value for the purpose of computing trading profits.
It is now proposed that this election can only be made where the appropriation into trading stock at market value would give rise to a chargeable gain and not where it gives rise to an allowable loss. This means that an allowable loss will be crystallised when the appropriation takes place, and the loss will therefore remain within the chargeable gains rules seriously reducing the ability to offset the loss.
Date: 8th March, 2017
Articles from this Author
Contact Business Service Partners
Choose from the drop down menu below to select a Partner to contact.
Mercer & Hole preserve the jobs of over 70 employees and 120 temporary staff bit.ly/2B7W9Mn
For the latest Mercer & Hole news, visit our LinkedIn page mercer-&-hole