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The capital assets of a farming partnership are owned in equal 25% shares by mother father son (S) and daughter (D). Along with the farming business the farm’s land and property and associated assets are being transferred into a new company. The cost of the farm being quite significant we are content to transfer it at cost claiming holdover relief (TCGA 1992 s 165).
Each partner will make a s 165 claim to holdover the gain that would otherwise arise on their share of the farm’s land and property and the cost of this along with the other assets that it is decided should be transferred into the new limited company (set up with a nominal share capital) will create a loan account which can be drawn on by the former partners who are now the directors/shareholders of the new company.
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