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A client received a bank loan of €750K approx 15 years ago and the client used these funds to make loan to a related company. The loan to the related company is still fully recoverable. Through normal repayments the bank debt has reduced to €350K and the bank recently made an offer to write off €170K on the basis the client makes a redemption payment of €180K. My client made the redemption payment and the bank wrote off the €170K and the debt is now cleared. I understand that in the case of an asset disposal the base cost is reduced by the write off but in this circumstance there has and will not be any asset disposal. Is this write off subject to tax(income tax or CGT?). Regards Paddy

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Asked on 11 April 2019 3:49 pm