Facts:
- Pre-CGT shares acquired before 20 September 1985 have been inherited
- Cost base in those shares will be market value on day person passed (there is a very big uplift in cost base)
- The underlying assets of the company are all post CGT assets and have been for a long time
- Since inherited, the underlying assets have largely been sold by the company and the market value of the company has declined. There is one property left in the company
- Considering selling shares in the company
Question 1.
Although the company has become a post CGT asset by having all its underlying assets be post CGT - i cannot see anything that states it will change the inherited cost base being market value on date of death. Please confirm.
Question 2.
When the shares are sold by the person who inherited them, I assume CGT event A1 will be occur and not K6. Please confirm.
Question 3.
If the shares are sold at market value - for illustrative purposes call it $500k. And the cost base is the market value of the shares on the date of death, call it $2m, then here will be a 1.5m capital loss. Is there anything preventing the capital loss?
It seems like too good to be true but I cannot see where it falls down.
Thanks in advance
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