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Where there is a part disposal of an asset (see C2.401), there are special computational rules to ensure that the allowable expenditure deducted in computing the gain represents the cost only of what has been disposed of. This is achieved by apportionment of the cost of the whole asset, and this is done as follows:

Where:

1. Ìý

   (A)ÌýÌýÌýÌý is the amount or value of the consideration for the disposal, and

2. Ìý

   (B)ÌýÌýÌýÌý is the market value of the property which remains undisposed of

then the fraction of the expenditure which is allowable as a deduction in computing the amount of the gain accruing on the disposal is:

The remainder is attributed to the property which remains undisposed of ¹ and can be deducted on a subsequent disposal.

If the part disposal is of an interest in an asset for a limited period, so that at the end of the period the taxpayer is able to dispose of the whole unencumbered asset, the cost to be deducted on the final disposal remains