Elliott transferred his manufacturing business into Elliott Ltd. for 10,000 shares in the company which he plans to hold.
When he transferred his business to a limited company, he found that there were unrelieved trading losses of £20,000.
Elliott received dividends of £8,000 from the company.
Ultimately, Elliott can relieve the trading loss he meets the following conditions:
- The consideration is wholly for the shares, so Elliott can continue to hold those shares.
- Elliott Ltd. continues to carry on the transferred manufacturing business.
The dividends received by Elliott are £8,000. The c/f loss is £8,000 and the loss is to be carried forward by £12,000 (£20,000-£8,000).
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