Rules are needed to govern situations in which assets move between the trading income regime1 and the capital gains tax regime. On the appropriation of capital assets to trading stock of a trade, there is a deemed disposal at market value (unless the asset is exempt from CGT)2. However, in a case where a chargeable gain would have accrued on the appropriation (but not a loss), taxpayers may elect for this deemed disposal to take place at an amount which will trigger no gain, with the future sale proceeds treated entirely as a trading receipt
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