Commentary

I4.310 Loss on sale of shares — examples

IHT, trusts and estates

I4.310 Loss on sale of shares — examples

I4.310 Loss on sale of shares — examples

Examples of loss on sale of shares

Example 1 — simple sale

Morris died leaving an estate which included the following holdings of qualifying investments:

Shares
NumberClassCompanyValue at date of death
£
5,000OrdinaryX Ltd10,000
1,000OrdinaryY Ltd3,000
4,000PreferenceZ Ltd4,000

Within the 12 months following the death, M's executors sold shares as follows:

Shares
NumberClassCompanyGross proceeds
£
5,000OrdinaryX Ltd8,000
500OrdinaryY Ltd2,000
3,000PreferenceZ Ltd3,500

All the sale prices represented the best consideration which could reasonably have been obtained for the shares at the time of sale.

The relief is calculated:

Shares
NumberClassCompany
A:5,000OrdinaryX Ltd£10,000
500OrdinaryY Ltd1,500
3,000PreferenceZ Ltd3,00014,500
Deduct B:
5,000OrdinaryX Ltd8,000
500OrdinaryY Ltd2,000
3,000PreferenceZ Ltd3,50013,500
Relief£1,000

The value of the qualifying investments included in the estate is therefore reduced by £1,000, if the relief is claimed by the appropriate person.

Example 2 — purchase then reinvestment

N died leaving an estate which included the following holdings of qualifying investments:

Shares
NumberClassCompanyValue £
5,000OrdinaryX Ltd10,000
1,000OrdinaryY Ltd3,000
13,000

Eleven months after the death, N's executors sold the holdings of shares in X Ltd and Y Ltd for £10,000. The loss on sale amounted to £3,000.

Within the 13 months after the death the executors invested, in their capacity of executors of N, a total of £2,000 in the acquisition of shares in Z Ltd which were

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