Anonymous
Share this content
0
153

Share for share transfer

Share for share transfer

A client bought back £21k of share capital at book cost in exchange for £49 book cost shares in subsidiary. Am I correct in thinking that we reduce share capital and post a capital gain for the sale of the shares in the subsidiary for £21k against the book value of £49?

Replies

Please login or register to join the discussion.

06th Dec 2018 12:01

Your client is a company presumably.

The answer to your question is probably, provided £21k is the fair value of the consideration given, which you don’t tell us.

Thanks (0)
avatar
06th Dec 2018 16:42

Yes it is. Thank you for your help

Thanks (0)
avatar
06th Dec 2018 17:46

Why does fair value come into it? (More precisely, why now, if not previously?)

Thanks (0)
avatar
to Tax Dragon
06th Dec 2018 18:10

thanks for taking the time to respond. I'm sorry I'm not too sure of what your question is? Could you clarify please?

Thanks (0)
avatar
to tracymair
07th Dec 2018 10:57

I’d read “£21k of share capital at book cost” to mean “£21k of share capital” (eg 21000 £1 shares). I would imagine that the value of those shares was something other than £21k. Maybe I missed John’s point. If it’s simply that (eg) 21000 shares in parent were worth the same as (eg) 49 shares in sub, then I get it now – although I should have thought that the actual value was relevant for the accounts, because in effect what has happened is that a distribution has been satisfied by the transfer of an asset. Of course, irrespective of whether values do touch the accounts, they are what’s used for tax.

Thanks (0)
Share this content