Bed and Breakfast

Help with bed and breaskfast.

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Help is required for bed and breakfast transactions.   The normal example quoted is 4000 shares sold for £6000 a profit of £1000.   500 then repurchased at cost of £700.  The disposal oproceeds are 500/4000 x £6000 = £750.   The gain is therefore £50.  The remaining shares sold (3500) then presumably produce a revided gain £875.  If this correct?  If the re-purchase is in a later tax year, when is the B & B gain declared?  My tax software asks for dates of acquisition and disposal.  In this case the two transactions triggering the gain arise in reverse order as the sale takes place before the purchase.  What entries are suggested?

The transactions of my client do not conform to the above in that he sells the whole of the holding of shares before re-purchasing some or all within 30 days.  How does this affect the calculations?

Finally my same client has managed to make multiple transactions in the same listed company whereby he sells the complete holding of shares and then re-purchases within 30 days.   The following are the dates of purchase and sale, all the same year:  purchase 15 March - sale 22 March; purchase 24 March - sale 7 April; purchase 21 April - sale 29 April; purchase 4 May - sale 17 May; purchase 25 May - sale 3 June; purchase 20 June - sale 24 June.  You may have quessed he is a 'do it yourself' investor, but has managed to make a profit on each transaction.   Can anyone advise as to the required calculations on these mutiple 30 day transactions?   Your patience and help is appreciated.

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By FoxAccountancyServices
23rd Jul 2016 12:11

The problem, for me at least, is that HMRC don't give the amount paid for the original 9500 shares. Then one can work out the cost of the 3500 being sold. It explains the loss on the 500 shares, but doesn't tie that into any total gain.

using your example, which I hope I've understood correctly, we had 4000 shares bought for £5000 (which, on the day of sale, when we haven't bought any further shares, had a profit of £1000). So opening 4000 shares at £1.25 each.

£5250 of the £6000 is related to the 3500 shares - £875 profit

£750 of the £6000 is related to the 500 shares - £50 profit

So I agree with your figures :)

I'm sure the software company can help you figure out how to input the dates? I only do one very small share job, so I do it manually (I hate it! LOL)

As I understand it, it doesn't matter if the whole shareholding is sold, and then repurchased... If it's within 30 days, the rule stands for valuation.

I haven't got a clue on the second half of your question!! Especially just with dates alone. I would imagine you just apply the rules. Start with the first sale, look at Same day, 30 days, everything else. Each sale considered on its own, as to which shares you use as the cost value.

Best of luck!

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