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OUR CLIENT RAN INTO DIFFICULTY WITH REPAYMENTS ON AN INVESTMENT PROPERTY A FEW YEARS AGO AND THE PROPERTY WAS TAKEN OVER BY RECEIVERS. THE PROPERTY WAS SUBSEQUENTLY PURCHASED BY A RELATIVE OF HIS FROM THE RECEIVERS AT A KNOCKDOWN PRICE. THIS CAUSED A GREAT DEAL OF FAMILY FRICTION AND THE RELATIVE NOW WANTS TO MAKE A CONSCIOUS PAYMENT OF €250K TO RESOLVE MATTERS. WHAT IS THE TAX TREATMENT OF SUCH A PAYMENT IN THE HANDS OF MY CLIENT? HE HAS A SIGNIFICANT CAPITAL TAX LOSS CARRIED FORWARD FROM THE DISPOSAL OF THE PROPERTY. CAN HE TREAT COMPENSATORY PAYMENT, SINCE IT RELATES TO THE SAME EVENT, AS A RECEIPT RELATING TO THE SALE OF THE PROPERTY AND THEREFORE UTILISE THE CAPITAL LOSSES FORWARD AGAINST IT?

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Asked on 26 August 2019 10:53 am
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