Section 1264 | Loss-making period in which some partners have profits

(1)For any accounting period of a firm, if—

(a)the calculation under section 1259 in relation to a partner (“company A”) produces a loss, and

(b)company A's share determined under section 1262 is a profit,

company A's share of the loss of the trade is neither a profit nor a loss.

(2)For any accounting period of a firm, if—

(a)the calculation under section 1259 in relation to company A produces a loss,

(b)company A's share determined under section 1262 is a loss, and

(c)the comparable amount for at least one other partner is a profit,

company A's share of the loss of the trade is the amount produced by the formula in subsection (3).

(3)The formula is—

(4)The comparable amount for each partner other than company A is determined as follows.Step 1Take the firm's loss calculated under section 1259 in relation to company A.Step 2Determine in accordance with the firm's profit-sharing arrangements during the relevant accounting period the shares of that loss that are attributable to each of the other partners.Step 3Each such share is the comparable amount for the partner to whom it is attributed.

(5)In subsections (2) to (4) “partner” means any partner in the firm, whether or not within the charge to corporation tax.