Capital gains tax. Disposal consideration. Purchaser of company agrees to discharge debt.Spectros disposed of the common stock in its subsidiary SIH. The agreed purchase price was $20,001,000, but at the time of purchase SIH had a liability of $20 million to a bank; the money borrowed had previously been paid to Spectros by SIH in the form of a dividend. The purchaser agreed to discharge the liability to the bank, and in the event only paid $1,000 for the common stock. On the facts in this case, the effect of the sale agreement and related agreements was that the disposal price of the common stock was indeed $20,001,000.David Goldberg KC and Hugh McKay appeared for the taxpayer
Spectros International plc v. Madden (Inspector of Taxes)  STC 114 (Ch D)
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