Section 140K — Taxation of Chargeable Gains Act 1992: Transparent entities: taxation after merger, &c

Transparent entities: taxation after merger, &c 140K 1 This section applies if—

a a transparent entity (“company A”) is a transferee for the purposes of section 140A(1A) or 140E, b a person (“X”) with an interest in company A was or is also a shareholder or debenture holder of a company (“company B”),

c X became entitled to an interest, or an increased interest, in company A in exchange for a disposal of shares in, or debentures of, company B on a merger to which section 140E applied or on a transfer to which section 140A(1A) applied, d a chargeable gain accrued to X on the disposal of shares in or debentures of company B, e in calculating the gain on the shares or debentures account was taken of the value of an asset of company B, and f X makes a disposal of his interest in the asset.

2 In computing the gain accruing to X on a disposal to which subsection (1)(f) applies, the sum allowable as a deduction in accordance with section 38(1)(a) in relation to the interest, or the proportion of the interest, which X acquired on the merger or transfer shall be the value taken into account in computing the gain on the disposal of his shares in, or debentures of, company B.

3 In this section a reference to an interest in company A includes—

a an interest in the assets of company A, b shares in company A, and c debentures of company A.