Corporation Tax Act 2009 section 739

Meaning of "proceeds of realisation"

Section 739 defines what "proceeds of realisation" means when a company disposes of an intangible fixed asset, and how those proceeds should be calculated for corporation tax purposes.

• Proceeds of realisation are the amount recognised in the accounts as disposal proceeds, minus any incidental costs of disposal (such as legal or brokerage fees).
• Where the company receives something other than cash (for example, another asset or goods in exchange), the proceeds must be calculated as the open market value — that is, the price the item received would reasonably be expected to fetch if sold on the open market.
• These amounts may be adjusted where required by other provisions in the same Part of the Act, or by transfer pricing rules that apply when transactions are not conducted at arm's length.
• This definition is relevant because when an intangible fixed asset is sold but is not recorded on the balance sheet, a taxable credit equal to the proceeds of realisation is brought into account.