I suspect that the DETE amount is an asset and not a liability. It sounds life a refund of redundancy payments paid by the company, on which a refund is due. You should be able to get the Revenue's agreement to set the amount due from the DETE against the amount owing to the Revenue.
Brendan
You are mixing up your assets and your liabilities.
The company owes €700k to your father. This is a (worthless) asset for your father but a liability for the company.
If I buy the company from you for €1, it makes no difference. The company still owes your father €700k. Why would I buy that company?
If a company started off with a lot of share capital and has lost most of it through accumulated losses, but is still solvent, it may have a value to a purchaser because of the unused tax losses. But with 12.5% tax in Ireland, I don't think that people are buying tax losses anymore.
The only solution for your father is to find a business which is guaranteed to generate profits so that he can repay the loan out of the profits. But if he has lost €700k in recent years, this is unlikely.
Can you park the company until things pick up? I suspect that the DETE amount is an asset and not a liability. It sounds life a refund of redundancy payments paid by the company, on which a refund is due. You should be able to get the Revenue's agreement to set the amount due from the DETE against the amount owing to the Revenue.
Brendan
It's pretty much irrelevant to the wider issue but I'd say it's more likely that it is money owed to DETE. Redundancy lump sums that a company was unable to pay due to lack of access to funds, will be paid out of the Social Insurance Fund, and as a result the company owes DETE 40%, rather than DETE owing the company 60%...
Hi OP
Prior to liquidation it is possible for your father to convert his loan to share capital and at least he would have this as a capital loss in the event of future capital gains.
Regards
NumberCruncher
I see what you're getting at Rusty.
I suppose the big question is, what price will your father sell his 700K "asset" in the company at ?
To make any sense of it you will need someone to buy the company for say 1 euro (as you suggest). The buyer in turn will need to discharge the other outstanding liabilities of the company and after that use the 700K liability to take money out of the business tax free.
I'm interested in your proposal if you want to PM me
Rustyjack's Dad gets no CGT loss for offset against a future gain.
Hi Mandlelbrot
Are my figures not correct?
If a son wanted to help out his father, he could buy the company for €1 and the debt for €85k. The father gets €85k. The son gets the same net income after tax.
This is not an issue in the above transaction.
If, as Number Cruncher suggests, the loan can be transferred into equity, it would be an issue. However, I don't know if that works.
Hi OP
Prior to liquidation it is possible for your father to convert his loan to share capital and at least he would have this as a capital loss in the event of future capital gains.
Regards
NumberCruncher
I like it. A lot!!
Hi OP
Prior to liquidation it is possible for your father to convert his loan to share capital and at least he would have this as a capital loss in the event of future capital gains.
Regards
NumberCruncher
I see what you're getting at Rusty.
I suppose the big question is, what price will your father sell his 700K "asset" in the company at ?
To make any sense of it you will need someone to buy the company for say 1 euro (as you suggest). The buyer in turn will need to discharge the other outstanding liabilities of the company and after that use the 700K liability to take money out of the business tax free.
I'm interested in your proposal if you want to PM me
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