CG27300 - Partnerships: fractional interests in partnership assets acquired in stage: SPD12.
Section 11 SP D12
Where partners acquire their fractional interests in partnership assets in stages over a period of time the acquisition costs are pooled.
Example
X was admitted to a partnership in Year 1 at which time he acquired a 20% interest in goodwill. His interest in goodwill was increased in subsequent years:
Year |
Percentage |
- |
Amount |
|---|---|---|---|
Year 1 |
20% |
cost |
£100,000 |
Year 3 |
10% |
cost |
£50,000 |
Year 5 |
5% |
cost |
£35,000 |
The base cost of Partner X’s 35% interest in goodwill for CG purposes is £185,000.
Any subsequent reduction in Partner X’s interest in goodwill will be treated as a part-disposal out of the pooled expenditure.