Chapter 24 - Partnership Capital Gains

Question 1

Introduction

Answer 1

Partnerships don’t pay CGT. They distribute gains to partners who then pay CGT.
Any partnership gains are included in the partnership return

Question 2

Disposals of Assets by a Partnership

Answer 2

Proceeds of disposals are allocated between the partners according to the profit share ratios. The acquisition costs are calculated in the same way.

Question 3

Distribution of Assets Between Partners

Answer 3

Where assets are passed between the partners on the dissolution of the partnership we calculate the gains which would have arisen had all the partners disposed of their share at market value.
Gains accruing to the partners giving up the asset are immediately chargeable to CGT
Gains accruing to the partner who gets the asset are only notional gains and aren’t charged to CGT. Instead, they are deemed to have bought it for the market value less the notional gain ie the gain rolls over and reduces base cost.