A client of mine gifted 10% of shares in his private company to his two children (5% each), 10 years ago.
These shares were valued at the time of the gift
He and his children have just sold 100% of their shares to a third party and have made a capital gain.
Can the children take the value of the shares as the 'cost' of the shares in the CGT calculation as the gift was the consideration for the shares?
Replies (6)
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The point is were any gains on the previous transfers held over or taxed at the time?
If the former, the children's cost now is their father's original cost.
Valued at time of gift?
There would have been different values at the same time(!) depending whether
I) IHT[ [loss to the estate'] or
ii)CGT
was in point.
Who valued the shares at the time?
For CGT usually a small minority share will be valued at up to a 90% discount to the pro rata share of the whole, so the children's base cost will have been depressed..
Most importantly, was the value established at the date of the gift specifically agreed with HMRC for CGT purposes? If not, their approach is to reserve their position as to whether they will be bound by that historical figure..
Johngogranjga has rightly pointed out that if there was a contemporary holdover election the value at the date of the gift will be ignored