Commonwealth Consolidated Acts Commonwealth Consolidated Acts(1) This section affects how to work out the total gain reductions and the total loss reductions for the purposes of section 727 - 625 if:
(a) a * realisation event covered by that section happens to an * equity or loan interest, or to an * indirect equity or loan interest, in the * losing entity or in the * gaining entity; and
(b) the interest is also * trading stock or a * revenue asset at the time of the event.
(2) In the case of an * equity or loan interest, or an * indirect equity or loan interest, in the * losing entity that is * trading stock at that time:
(a) the amount (if any) by which section 727 - 615 or 727 - 850 reduces a loss worked out under section 977 - 25 or 977 - 30 (about realisation events for trading stock) that would, apart from this Division, be * realised for income tax purposes by the event is taken into account; and
(b) the amount (if any) by which section 727 - 615 or 727 - 850 reduces a loss worked out under section 977 - 10 (about realisation events for CGT assets) that would, apart from this Division, be * realised for income tax purposes by the event is not taken into account;
in working out the total loss reductions.
(3) In the case of an * affected interest in the * gaining entity that is * trading stock at that time:
(a) the amount (if any) by which section 727 - 620 reduces a gain worked out under section 977 - 35 or 977 - 40 (about realisation events for trading stock) that would, apart from this Division, be * realised for income tax purposes by the event is taken into account; and
(b) the amount (if any) by which section 727 - 620 reduces a gain worked out under section 977 - 15 (about realisation events for CGT assets) that would, apart from this Division, be * realised for income tax purposes by the event is not taken into account;
in working out the total gain reductions.
(4) In the case of an * equity or loan interest, or an * indirect equity or loan interest, in the * losing entity that is a * revenue asset at that time, the greater of the following is taken into account in working out the total loss reductions:
(a) the amount (if any) by which section 727 - 615 or 727 - 850 reduces a loss worked out under section 977 - 55 (about realisation events for revenue assets) that would, apart from this Division, be * realised for income tax purposes by the event;
(b) the amount (if any) by which section 727 - 615 or 727 - 850 reduces a loss worked out under section 977 - 10 (about realisation events for CGT assets) that would, apart from this Division, be * realised for income tax purposes by the event.
(5) In the case of an * affected interest in the * gaining entity that is a * revenue asset at that time, the greater of the following amounts is taken into account in working out the total gain reductions:
(a) the amount (if any) by which section 727 - 620 reduces a gain worked out under section 977 - 55 (about realisation events for revenue assets) that would, apart from this Division, be * realised for income tax purposes by the event;
(b) the amount (if any) by which section 727 - 620 reduces a gain worked out under section 977 - 15 (about realisation events for CGT assets) that would, apart from this Division, be * realised for income tax purposes by the event.