Chapter 12: Capital Gains Tax

Question 1

What should you use AEA on first

Answer 1

Residential property

Question 2

capital losses

Answer 2

Carry forward after deducting AEA

Question 3

Part disposal formula

Answer 3

A / (A+B) * Cost

A = Gross proceeds of part disposed
B = MV of the part retained

Question 4

Asset destroyed or lost

What is the sales proceeds and date of disposal

Answer 4

Treat sale proceeds as compensation received

Disposal date when compensation is received

Question 5

Asset destroyed or lost

Receive insurance - use all within 12 months to replace

Answer 5

Deemed proceeds = value which gives no gain/loss

If proceeds > value which gives no gain/no loss , deduct the excess from the replacement asset cost

Question 6

Asset destroyed or lost

Receive insurance - use part within 12 months to replace

Answer 6

Immediate gain = excess proceeds that are not reinvested in replacement

Remainder of gain can be deferred by electing for no gain/loss

this is done by decreasing the cost of the replaced asset

Question 7

Inter-spouse transfer

one spouse dies and leaves asset to other spouse

Answer 7

Spouse takes on asset at probate value ie MV at the date of death

Question 8

Connected persons

Answer 8

Parents, children, grandparents, siblings

Deemed at market value, ignore selling price

Question 9

Chargeable gain

Answer 9

Gain before AEA

Question 10

Taxable gain

Answer 10

Gain after AEA