partnership cap gains - further aspects

Question 1

leaving a partnership

Answer 1

• no cap gains consequences for leaving and withdrawing their capital from the partnership
• partner on death / retirement shares decreases remaining partners share increases
• each partner is considered to own a fractional share in each of the partnership assets - the concept of a partnership does not exist for cgt purposes
• if a partner dies/retires the remaining partners are treated as though they have an acquisition & the leaving partner has a disposal

Question 1

joining a partnership

Answer 1

• if someone joins and transfers an asset to the partnership, they are treated as having made a part disposal of the asset
• if they are entitles to 10% of the profits then they will treat it as a 90% disposal
• the cost of the asset is adjusted using A/(A+B)
• A+B being the total consideration
• the existing partners base cost is the consideration * their % of profits