Increase capital through prism of multiple transactions with assets - capital assets

Given the approach of the term for declaring income for tax purposes quite frequently, there are requests to explain the principles of calculating the capital increase when the person has had several acquisitions and acquisitions of assets that represent capital assets.


For example, in a recent case, a citizen donated to his son  an apartment that, through the donation contract, was transferred to the amount of 1253450 lei, which in fact represents the market price at the time of the donation. Six years ago the apartment in question was purchased at a price of 978,500 lei. At the same time, the citizen in question sold a Opel car at a price of 52,000 lei previously purchased at the price of 85,000 lei. Also during the fiscal year he purchased another Honda car at 268450 lei.



Addressing the specialists of Priminfo Grup, the person concerned asked whether or not he had the right to decrease the capital increase in the amount of 274950 lei (1253450 lei - 978500 lei) obtained from the donation of son or apartment, with the loss of capital obtained as a result of the sale of the Opel car in the amount of 33000lei (52000 lei - 85000 lei), as well as the amount of 268450 lei spent on the purchase of the Honda. In his view, the capital increase of 274950 lei is less than the total amount of 301450 lei, which includes the capital loss of 33,000 lei and the amount of 268450 lei spent on the purchase of the last car.


In fact, taking into account the provisions of the Fiscal Code, the person was told that the amount spent on the acquisition of a capital asset can not be defined as a capital loss, as it usually occurs only when the capital asset is thrown away and only when the asset has been alienated to a value less than the purchase price.

In our case the capital increase would have been reduced only with the 33,000 lei capital loss obtained from the sale of the Opel.

However, in the given situation, the citizen did not obtain a taxable capital increase, given that the capital increase or loss is not recognized for tax purposes in the case of a donation agreement between relatives of the first degree. (As previously mentioned, the donation has been made to the taxpayer's son, who is a Grade I relative.)


In the aggregate of the above, the Priminfo Group recommends and regards as welcome any situation in the field of taxation and not just to be assigned to the specialists in the field, who will ultimately provide a solution resulting from the legal provisions and not from any deductions or personal perceptions, or the latter in many cases, differ from person to person and usually do not in all cases rely entirely on the legal framework.