Readers’ forum: Purchasing non-depreciating assets to defer tax

My clients are husband and wife and have set up a partnership. About nine years ago they sold one of their businesses and they used the proceeds of the sale to invest in other depreciating business assets.

Their daughter (D) and son-in-law (S) have also left their jobs and they have started ‘dabbling’ in the family business. For a number of years they have expressed an interest in joining the parents’ partnership but they were told they had to make their own contribution in order to join. They therefore saved up and with that money they bought land which they transferred to the partnership. Their proceeds on this disposal were also used to buy other business assets which are also unfortunately depreciating.

The ten-year deferral period for the parents’ gains is about to expire and the partnership (which now includes...