CG27300 - Partnerships: fractional interests in partnership assets acquired in stage: SPD12.

Section 11 SP D12

Where partners acquire their fractional interests in partnership assets in stages over a period of time the acquisition costs are pooled.

Example

X was admitted to a partnership in Year 1 at which time he acquired a 20% interest in goodwill. His interest in goodwill was increased in subsequent years:

Year	Percentage	-	Amount
Year 1	20%	cost	£100,000
Year 3	10%	cost	£50,000
Year 5	5%	cost	£35,000

The base cost of Partner X’s 35% interest in goodwill for CG purposes is £185,000.

Any subsequent reduction in Partner X’s interest in goodwill will be treated as a part-disposal out of the pooled expenditure.