Ch10 - Trading Losses for Individuals

Question 1

Carrying forward of loss

Answer 1

Can be in current tax year, or previous tax year, can be made in both years in any order or in either year in isolation

Question 2

If no election is made

Answer 2

Carried forward against future years in order

Question 3

Capital Gains Tax Proforma?

Answer 3

Any excess can be used against Net chargeable gains
Chargeable gains in year X
Less: capital losses in year (X)
Subtotal X

Less: Trading loss relief (W) (X)
Less: AEA ($6k)
Net chargeable gains before b/f losses X

Question 4

Offsetting further relief against chargeable gains

Answer 4

Can do so if opting to choose relief total income

Question 5

Special prior 3 year relief

Answer 5

Offsets in order of years??? I think so…

Question 6

Terminal Loss Relief (Ceasing Trading)

Answer 6

LIFO basis
Trading Income
Less: Terminal loss
Net Income
Less: PA
Taxable Income

Question 7

Maximum amount of relief when choosing total income method

Answer 7

Greater of:
$50k
25% of adjusted total income

Applies to same year and prior year if same trade…?

Question 8

Adjusted Total Income

Answer 8

Total income X
Less gross PPC (X)
Adjusted total income X
*25%

Question 9

Partnership losses

Answer 9

Same as sole traders: first four years and not available to existing partners

If they join = special opening relief
If they leave = terminal loss rrelief

Question 10

Further notes: Trade losses carried forward

Answer 10

Must be deducted from profits of the same trade

Question 11

Total income

Answer 11

Prior two years and can be and/pr