Corporate taxes backdating checks

A negligible value claim is also possible on purchased goodwill.

However some basic conditions must be met, namely that the taxpayer still owns the asset at the time of the claim and the asset has become of negligible value since it was acquired.

If a company has been dissolved, no negligible value claim can be made.

In effect, the shares ceased to exist at the dissolution of the company, so can no longer be said to be in the taxpayer’s possession.

A negligible value claim cannot be made once the business has ceased to trade because, in effect, the goodwill ceases on the permanent cessation of the business to which it relates and therefore the taxpayer no longer owns the goodwill.For instance, if a partnership agreement includes a clause that retiring partners will not be paid for goodwill and new partners do not need to buy goodwill, the goodwill becomes worthless to a partner on retirement. Although the goodwill has become of negligible value to the retiring partner, the goodwill of the partnership as a whole has not.In some circumstances, the loss arising from a negligible value claim can be set against income, either of the same or the preceding tax year (or both) instead of against capital gains.Negligible value claims can be easy to miss, but this valuable relief should not be overlooked All negligible value claims should be reviewed regularly, especially towards the end of a tax year.It is vital that the claims are not left too late if they are to succeed.

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