In the year of transfer the receipt is apportioned between the part of the business being retained and the part being transferred. This apportionment is made on a just and reasonable basis. For example this could be with reference to reserves or to the lines of business being transferred.

The receipt relevant to the business being transferred is then apportioned between the transferor and transferee on a time basis for the year of transfer.

In subsequent years the appropriate parts of any remaining receipts determined on a just and reasonable basis are treated as receipts of the transferee, and the receipts of the transferor are reduced accordingly.

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