Page 12 - F6 - Capital Allowances - Intellectual Property & Recoupments

Solution

Tax value:

 Cost 3 000 000

 Less: allowances

 2014: (3 000 000 x 40%) (1 200 000)

 2015: (3 000 000 x 20%) (600 000)

 Tax value at date of sale 1 200 000

Recoupment:

Market value (1 800 000) Ltd to Cost (3 000 000) less

Tax value (1 200 000) = 600 000