Pct June 2007 Help!!!!

vajarkvajark New MemberPosts: 7Registered
Can someone help me, please.

Task 2.1 - why can you sell shares which you haven't bought yet?
I cannot understand the answer. 4,000 shares sold 23 Feb 2007, matched 3,500 shares from s1998pool and 500 shares from purchase 10 March 2007. Why....?
Please help.

Comments

  • mehmetmehmet Well-Known Posts: 113Registered
    It's part of the share matching rules???

    As HMRC states:
    When you dispose of shares you cannot work out your capital gain or loss until you have matched the shares disposed of with shares you acquired. You are treated as disposing of shares in the following order:

    First, shares acquired on the same day as the disposal.

    Second, shares acquired in the 30 days following the day of disposal (the 'bed and breakfasting' rule) provided the person making the disposal was resident in the United Kingdom at the time of the acquisition if the relevant acquisition was on or after 22 March 2007.

    Third, shares acquired after 5 April 1998, taking the most recent acquisitions first (a last in, first out, or 'LIFO' basis).

    Fourth, shares in the Section 104 holding.

    Fifth, shares in the 1982 holding.

    Sixth, shares held on 6 April 1965.

    It was brought in by HMRC to stop "Bed & Breakfasting", where shareholders would sell shares and then acquire identical ones soon afterwards in order to create a Capital Gain free of tax (because it is covered by the Annual Exempt Amount), or a Capital Loss to offset other gains against.
  • vajarkvajark New Member Posts: 7Registered
    Thank you so much!! It was a confusing one. Now I understood what 'Bed and Breakfast' shares meant.
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