Sell shares to son to crystallise loss.

Sell shares to son to crystallise loss.

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If a father has a share holding in an illiquid fund can he sell these to his son at market value and crystallise a loss?

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By David Massey
14th Mar 2011 16:15

Yes, but...

It will crystallise a loss, but the loss will be "clogged". You will only be able to set it against gains arising on the transfer of assets to the same son. So it probably won't achieve what you're hoping for. David

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By Lynne Thompson
14th Mar 2011 16:16

Not necessary to sell

If an asset is sold to a connected person the disposal proceeds are the market value.

So if the asset is worthless the disposal proceeds are nil.

However, if the purpose is to crystallise a loss it is not necessary to sell the asset as a negligible value claim can be made. 

In this case the asset is deemed as having been sold and immediately reacquired at the current market value.

The claim can be backdated for 2 years (which it could not if it had been sold to S) provided the asset had become negligilbe in that time.

 

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By Markhamfc1
14th Mar 2011 16:35

doesn't sound good.

In this case the asset/shares were bought at £6.50 a share and is now worth 50p with little hope of achieving over £1. The crystalised loss was to be used against another gain but it sounds like this won't work.

His SIPP wont accept the share either.

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