Page 34 - F6 - Capital Gains Tax - Base Cost

Solution – loss-limitation rule 3

This is a historic loss situation. The market value was

determined by the taxpayer.

The valuation date value will be the lower of

 market value (R150), or

 time-apportionment base cost (R75).

The capital gain will therefore be determined as follows:

Proceeds R50

Less: Base cost (R75)

Capital loss (R25)

Par 27(3)(b) mostly favours the fiscus. The large artificial

loss of R100, using market value (R50 – R150), is replaced

with a smaller loss of R25 (using TAB).