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In which cases are gains or losses on assets not recognized?
Please explain Article 144.1.3 of the Tax Code (regarding the reinvestment of proceeds in a similar asset by the end of the following year when an asset is destroyed, liquidated, or disposed of beyond the owner's control).
The State Tax Service under the Ministry of Economy has stated that, pursuant to Article 144.1.3 of the Tax Code, if an asset is destroyed, liquidated, or disposed of free of charge or beyond the owner's control, and the proceeds are reinvested in a similar or equivalent asset by the end of the year following the year in which the asset was liquidated or disposed of, any gain or loss arising from that asset is not recognized when determining taxable income.
As can be seen from Article 144.1.3 of the Tax Code, the non-recognition of gains or losses is conditional upon the proceeds being reinvested in a similar or equivalent asset by the end of the year following the liquidation or disposal of the asset. If the proceeds are not reinvested within this period, they are treated as taxable income for corporate income tax or personal income tax purposes and are subject to taxation.
Please explain Article 144.1.3 of the Tax Code (regarding the reinvestment of proceeds in a similar asset by the end of the following year when an asset is destroyed, liquidated, or disposed of beyond the owner's control).
The State Tax Service under the Ministry of Economy has stated that, pursuant to Article 144.1.3 of the Tax Code, if an asset is destroyed, liquidated, or disposed of free of charge or beyond the owner's control, and the proceeds are reinvested in a similar or equivalent asset by the end of the year following the year in which the asset was liquidated or disposed of, any gain or loss arising from that asset is not recognized when determining taxable income.
As can be seen from Article 144.1.3 of the Tax Code, the non-recognition of gains or losses is conditional upon the proceeds being reinvested in a similar or equivalent asset by the end of the year following the liquidation or disposal of the asset. If the proceeds are not reinvested within this period, they are treated as taxable income for corporate income tax or personal income tax purposes and are subject to taxation.