Market leading insight for tax experts
View online issue

Back to basics: Depreciatory transactions & value shifting

Speed read

This guide considers two anti-avoidance provisions – concerning depreciatory transactions and value shifitng – which should be considered whenever a company is sold out of a capital gains group. The depreciatory transaction rules can only adjust a loss. They may eliminate a loss but cannot turn it into a gain. The rules may be invoked where an asset is transferred at no gain /no loss prior to a sale of a subsidiary or where there is a dividend strip prior to sale. Value shifting adjustments can decrease a loss, turn a loss into a gain or increase a gain. Value shifting may apply where assets are transferred at below market value and cost or dividends are paid out of manufactured profits prior to the sale.

If you or your firm subscribes to Taxjournal.com, please click the login box below:

If you do not subscribe but are a registered user, please enter your details in the following boxes:

Alternatively, you can register free of charge to read a limited amount of subscriber content per month.
Once you have registered, you will receive an email directing you back to read this article in full.
EDITOR'S PICKstar
Top