Section 559 Assets derived from other assets

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(1) If and in so far as, in a case where assets have been merged or divided or have changed their nature, or rights or interests in or over assets have been created or extinguished, the value of an asset is derived from any other asset in the same ownership, an appropriate proportion of the sums allowable as a deduction in respect of the other asset under paragraphs (a) and (b) of section 552(1) shall, both for the purpose of the computation of a gain accruing on the disposal of the first-mentioned asset and, if the other asset remains in existence, on a disposal of that other asset, be attributed to the first-mentioned asset.

How do I calculate deductible expenditure for an asset which is derived from another asset?

(1) In a CGT computation on the disposal of an asset that is derived from another asset, deductible expenditure is apportioned between the first and second asset.

(2) The appropriate proportion shall be computed by reference to the market value at the time of disposal of the assets (including rights or interests in or over the assets) which have not been disposed of and the consideration received in respect of the assets (including rights or interests in or over the assets) disposed of.

On what basis is the apportionment calculated?

(2) The apportionment is based on the market value, at the time of disposal, of the assets not disposed of, and the consideration received for the assets.