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Transfer of assets from Partnership to Ltd Co

Transfer of assets from Partnership to Ltd Co

We have a Client who has a Partnership with 2 partners.    The partners are also the directors and shareholders of a Ltd Co.  Incorporation relief is not appropraite as not all assets are being transferred from the Partnership.  They wish to transfer the Plant & Machinery into the Ltd Co in return for cash/loan.  The TWDV of assets is £900,000, the Book Value is £1,300,000 and the likely market value is £2,000,000.  

We believe that for tax purposes this will be transferred at TWDV but what value should we use for accounting purposes? 

Any assistance would be greatly appreciated. 

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By BKD
28th May 2012 15:08

I'd use market value

If £2m is genuinely the open MV then that's what I'd 'sell' it to the company for, maximising the credit to directors' loan accounts. As you say, value for tax purposes can be fixed at TWDV.

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