Changes in shareholdings: renounced bonus issue
The ‘appropriate person’ (IHTM34161) may choose to renounce the bonus issue for either
- consideration, or
Renounced for consideration
You should refer any claim where the shares allotted under a bonus issue are renounced for consideration to Technical (IHTM01081).
At the date of death the deceased owned 1,000 qualifying shares, valued at £3,000. Shortly after death there was a 1 for 2 bonus issue that was renounced gratuitously in favour of a child. Subsequently half of the original holding, 500 shares was sold within 12 months for £800.
In this case you should use the formula (IHTM34183) in IHTA84/S183 (5) to calculate the date of death value of the shares sold. The loss is the difference between that value and the gross proceeds.
The calculation is
|Adjusted date of death value||Vs (H - S) =||800 (3,000 - Nil)||= £1,000|
|(Vs + Vr)||800 + 1,600|
|Less gross proceeds||£800|