Application of the 'Bed & breakfast' rule

namenotavailablE · 14-06-2021 9:39am #1

I'm wondering about how a gain would be calculated in the following hypothetical situation:

100 shares purchased on 1 Jan, 1 Feb and 15 Feb. On 1 March, 200 shares are sold.
Under the B&B rule, the 100 shares purchased on 15 Feb are deemed to be sold- I'm clear on that.

My query is for the remaining 100 sold shares: would you calculate using the 1 Feb shares (I.e. continue to apply the B&B LIFO rule) or would you use the FIFO rule and calculate using the shares purchased on 1 Jan (I think this is correct but am seeking confirmation)?

namenotavailablE · 16-06-2021 4:29pm

Bump

howardmarks · 16-06-2021 4:35pm

namenotavailabl wrote: »

I'm wondering about how a gain would be calculated in the following hypothetical situation:

100 shares purchased on 1 Jan, 1 Feb and 15 Feb. On 1 March, 200 shares are sold.
Under the B&B rule, the 100 shares purchased on 15 Feb are deemed to be sold- I'm clear on that.

My query is for the remaining 100 sold shares: would you calculate using the 1 Feb shares (I.e. continue to apply the B&B LIFO rule) or would you use the FIFO rule and calculate using the shares purchased on 1 Jan (I think this is correct but am seeking confirmation)?

Link to revenue material.
https://www.google.com/url?sa=t&source=web&rct=j&url=https://www.revenue.ie/en/tax-professionals/tdm/income-tax-capital-gains-tax-corporation-tax/part-19/19-04-06a.pdf&ved=2ahUKEwin3fjfvJzxAhUHhVwKHbDeAbYQFjACegQIExAC&usg=AOvVaw3cPeecoBpl22_9ZORTT-lw

namenotavailablE · 16-06-2021 5:34pm

Thanks Howard- it's the correct understanding of paragraph 6A3.1 I'm focusing on.

I think my understanding of the relevant treatment in the hypothetical situation is correct as per the last sentence of my original query but if anyone can confirm this that would be great!

howardmarks · 16-06-2021 10:09pm

namenotavailabl wrote: »

Thanks Howard- it's the correct understanding of paragraph 6A3.1 I'm focusing on.

I think my understanding of the relevant treatment in the hypothetical situation is correct as per the last sentence of my original query but if anyone can confirm this that would be great!

Only the shares purchased in the previous 4 weeks are subject to lifo. The other shares use fifo as per the paragraph before the one on b+b

Application of the 'Bed & breakfast' rule

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