°Ç¸ç³Ô¹Ï

TCGA92/S46

Mr S purchases from a descendant the copyright over the memoirs of a writer 20 years after the end of the year in which the writer died. That copyright is, therefore, a wasting asset since it now has a predictable life of fifty years, see CG76723. He pays the descendant £90,000 for it but does not expect it to have any residual value in fifty years’ time.

After five years, Mr S has to take action to prevent a breach of his copyright. This costs him £10,000 in allowable expenditure on legal fees.

He later sells after twenty years for £80,000.

The computation now becomes:

Ìý	Ìý	Ìý	Ìý	Ìý	£	Ìý	Ìý	Ìý	Ìý
Ìý	Disposal proceeds	Ìý	Ìý	Ìý	Ìý	80,000	Ìý	Ìý	Ìý
LESS	Acquisition cost [E(1)]	Ìý	Ìý	Ìý	90,000	Ìý	Ìý	Ìý	Ìý
Ìý	Reduction as CG76791	Ìý	Ìý	Ìý	36,000	Ìý	Ìý	Ìý	Ìý
Ìý	Allowable cost	Ìý	Ìý	Ìý	Ìý	54,000	Ìý	Ìý	Ìý
Ìý	Legal expenses [E(2)]	Ìý	Ìý	Ìý	10,000	Ìý	Ìý	Ìý	Ìý
Ìý	T(1) - T(2) = 20 - 15 = 5	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý
Ìý	L - [T(1) - T(2)] = 50 - 5 = 45	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý
Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý
Ìý	E(2) x	T(2)	=	10,000	x	15	=	3,333	Ìý
Ìý	L - [T(1) - T(2)]	Ìý	45	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý
Ìý	Ìý	Ìý	Ìý	Ìý	6,667	Ìý	Ìý	Ìý	Ìý
Ìý	Allowable expenditure	Ìý	Ìý	Ìý	Ìý	60,667	60,667	Ìý	Ìý
Ìý	Gain	Ìý	Ìý	Ìý	Ìý	19,333	Ìý	Ìý	Ìý
Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý	Ìý

NOTE. Companies and other concerns within the charge to Corporation Tax may be able to claim indexation allowance, see CG17200+.