Commentary

D6.617 Capital treatment—proceeds used to pay inheritance tax

Corporate tax
Corporate tax | Commentary

D6.617 Capital treatment—proceeds used to pay inheritance tax

Corporate tax | Commentary

D6.617 Capital treatment—proceeds used to pay inheritance tax

If the payment made by the company for the buy-back of its own shares is used by the recipient to pay inheritance tax charged on a death, the payment may be treated as a capital receipt if the following conditions are satisfied1:

  1.  

    (a)     substantially the whole (ie nearly all2) of the purchase money is applied by the recipient in paying the tax;

  2.  

    (b)     the tax was charged on a death;

  3.  

    (c)     the payment received from the company is applied in discharge of the tax liability within two years after the death; and

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