Section FO 10 — Income Tax Act 2007: When property passes on resident’s restricted amalgamation

FO 10 When property passes on resident’s restricted amalgamation When this section applies (1) This section applies when property belonging to an amalgamating company becomes the property of the amalgamated company on a resident’s restricted amalgamation. What this section does not apply to (2) Despite subsection (1), this section— (a) does not apply to property that is a financial arrangement, see sections FO 12 to FO 15 : (b) is subject to the rules for— (i) amortising property in section FO 16 : (ii) land in section FO 17 . Property passing (3) The amalgamating company is treated as having disposed of the property immediately before the amalgamation. The passing of ownership is treated as a disposal of the property by the amalgamating company and an acquisition of the property by the amalgamated company. Timing and consideration (4) Unless subsections (5) or (6) apply, the amalgamated company is treated as having acquired the property on the date on which the amalgamating company acquired it for an amount that is the sum of— (a) the price paid for the property; and (b) any expenditure incurred in buying or improving the property; and (c) any expenditure incurred in securing or improving the amalgamating company’s legal rights to the property. Trading stock (5) If the property is trading stock for both the amalgamating company and the amalgamated company, the consideration for the disposal and acquisition is taken as the value of the trading stock to the amalgamating company determined under subpart EB (Valuation of trading stock (including dealer’s livestock)) at the time of the amalgamation. Revenue account property (6) If the property is revenue account property of the amalgamating company but not revenue account property of the amalgamated company, the consideration for the disposal and acquisition is taken as the market value of the property at the time of the amalgamation. But this subsection does not apply to land that is revenue account property merely because of the 10-year rule in sections CB 9 to CB 11 and CB 14 (which relate to the disposal of land), in which case section FO 17(3) may apply. Depreciation loss (7) An amalgamating company is allowed a deduction under section DV 15(3) (Amalgamated companies: property passing on resident’s restricted amalgamation) for an amount of depreciation loss for property transferred to the amalgamated company for the period beginning on the first day of the income year of amalgamation and ending on the day before the date of the amalgamation. Defined in this Act: amalgamated company , amalgamating company , amortising property , amount , deduction , financial arrangement , income year , land , market value , resident’s restricted amalgamation , revenue account property , , trading stock Compare: 2004 No 35 ss FE 6(1)–(3B) , FE 6A