TCGA92/S251 (3) operates where a creditor acquires property in satisfaction of his debt. If

a loan is converted into shares, and

the shares are issued as part of a reorganisation of the company's share capital (TCGA92/S126 – see CG51700 onwards)

TCGA92/S127 provides that the transaction is treated as involving no acquisition of the shares issued (see CG51805) so TCGA92/S251 (3) cannot apply. If the transaction was not a bargain made at arm's length the allowable cost of the new shares may be restricted by TCGA92/S128 (2) (see CG51840 onwards).

However, in many cases the conversion of a loan into shares is not a share reorganisation. For example, the shares may not be

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