Ch 20: Corporate losses

Question 1

How do you relieve a trading loss in a continuing business?

Answer 1

1st: Current year vs total profit (all income before QCDs)
2nd: Carryback for 12mths against total profit
* This is a choice but you must do current year first if you want to then carryback
* Unrelieved losses are carried forward

Question 2

How do you relieve a trading loss for terminal losses?

Answer 2

1st: Current year
2nd: Carry back for 36mths (not 12) on a LIFO basis

Question 3

When do restrictions on loss relief apply?

Answer 3

• a change of ownership of a company AND

- a major change in the nature or conduct of the trade of a company within a 5 YEAR PERIOD of the change in ownership

Question 4

How do you calculate Terminal Loss Relief?

Answer 4

TLR is the actual results of the last 12 months of trade increased by any overlap profits