Ascertainable or Unascertainable Earn Out for CGT

Which is it in the following instance?

Didn't find your answer?

If an earn-out is a set amount per year for three years, payable only if a minimum profit level is reached in each of those years, is this unascertainable?

In this instance, we can ascertain the actual amount of the earn out as it is not a percentage but a set figure. Also, it is an all or nothing payment, if the profit is hit or exceed, amount gets paid, if not, nothing gets paid.

But, what we cant ascertain is whether those profits will be hit. So does that make the Earn Out unascertainable even though we know the actual figures?

Replies (1)

Please login or register to join the discussion.

By gbuckell
16th Sep 2016 10:19

From your comments the amount is ascertainable but contingent on profit targets being achieved. Thus the full amount is brought into the CGT comp on day 1 but a refund can be obtained if some or all of these sums are ultimately not received.

Thanks (0)