Home For AAT student members AQ 2013 AAT Level 4 (Level 8 in Scotland)
Current updates regarding coronavirus (Covid-19) and the precautions AAT are taking will be continually updated on the below page.

Please check this link for the latest updates:
We hope you are all safe and well and if you need us we will be here. 💚


Corporation Tax - Chargeable Gains - B.Tax

DIPS6369DIPS6369 Settling In NicelyRegistered Posts: 17
In the osbourne Workbook Q.4.1 states the following:

Sale of asset for £15,000 to Director who owns 80% of shares in Company. Market value of asset is £35,000.
Tick the approriate boxes [Actual Proceeds] [Market Value] [£6,000] [Zero]
The answer in the book states this is MARKET VALUE.

A bit further down similar question:
Sale of asset for £15,000 to Director who owns 10% of shares in Company. Market value of asset is £35,000.
Tick the approriate boxes [Actual Proceeds] [Market Value] [£6,000] [Zero]
The answer in the book states this is ACTUAL PROCEEDS.

Please could someone please explain how can similar questions have two different answers, as I have to sit the Business Tax CBE soon.

Comments

  • MonsoonMonsoon Font Of All Knowledge FMAAT, AAT Licensed Accountant Posts: 4,071
    I think it's due to the shareholdings. In the first example, the Director owns the majority of the company so it's not an arms length transaction, thus market value is used.

    In the second, the director is a minority shareholder and so the actual proceeds are used.
Sign In or Register to comment.