Easy2 marksMultiple Choice
ACCA · Question 15 · Chargeable gains for individuals
Section A
David gifted shares in his personal trading company to his son, Leo. The shares had a market value of £100,000 and originally cost David £20,000. David and Leo jointly elect for Gift Hold-over Relief (Business Asset Gift Relief).
What is Leo's base cost for the shares for Capital Gains Tax purposes?
Section A
David gifted shares in his personal trading company to his son, Leo. The shares had a market value of £100,000 and originally cost David £20,000. David and Leo jointly elect for Gift Hold-over Relief (Business Asset Gift Relief).
What is Leo's base cost for the shares for Capital Gains Tax purposes?
Answer options:
A.
£100,000
B.
£80,000
C.
£20,000
D.
£0
How to approach this question
Calculate the gain (Market Value - Cost). Deduct the held-over gain from the Market Value to find the donee's base cost.
Full Answer
C.£20,000✓ Correct
The gain on the gift is Market Value (£100,000) - Cost (£20,000) = £80,000. By electing for Gift Hold-over Relief, this £80,000 gain is deferred. Leo's base cost is the Market Value (£100,000) minus the held-over gain (£80,000), which equals £20,000. Effectively, the donor's original cost becomes the donee's base cost.
Common mistakes
Confusing the held-over gain with the base cost.
Practice the full ACCA TX — Taxation Practice Exam 2
32 questions · hints · full answers · grading
More questions from this exam
Q01Section A
Marcus, a self-employed marine biologist, filed his self-assessment paper tax return f...EasyQ02Section A
AgriCorp Ltd granted a 21-year lease on a piece of agricultural land to a tenant farme...MediumQ03Section A
Quantum Robotics Ltd, a tech startup, provided its marketing director with a new fully...MediumQ04Section A
Elena sold an antique weaving loom (a tangible movable property) for £6,500. She had o...MediumQ05Section A
Which of the following conditions is NOT required for an individual to qualify for Bus...Easy
Expert