Client company wants to carry out a capital reduction by way of creating distributable reserves.
I’m aware that with a ‘one-stage’ reduction a part-disposal calculation is carried out to attribute base cost when calculating the capital gain.
But with an income distribution what happens to the tax base cost of the remaining shares? My understanding is that the distribution of the newly created reserves is simply treated as an income distribution in full. So do the remaining shares carry forward the full base cost or does it get reduced somehow?