Trading (profession or business) profits

The following steps should be taken when establishing the taxable profits in respect of a partnership trade:

(1)ascertain the profit of the trade computed in accordance with generally accepted accounting principles (GAAP) (ITTOIA 2005, s. 25; CTA 2009, s. 46);

(2)adjust the accounting profit in accordance with any specific tax rules applicable, under income tax provisions for individuals and company tax provisions for companies, giving effect to any claims or elections made; then

(3)allocate a share of the adjusted profits to the partners in accordance with the profit sharing arrangements during the accounting period (see Chapter 10).

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