SQE1 sample questions

Question 25

A testator died leaving a will by which all of his estate passed to his adult son and adult daughter in equal shares.

The estate assets included shares in a company quoted on the London Stock Exchange with a probate value of £100,000. Half of the shares were transferred to the son and the other half were transferred to the daughter. At the date of the transfer, the total value of the shares was £150,000.

A month later the daughter sold all of her shares and the net sale proceeds were £85,000. Two months later the son sold all of his shares and the net sale proceeds were £45,000. The executor has not yet completed the administration of the estate.

Which of the following statements best describes the Capital Gains Tax position on the shares sold during the administration period?

A. The daughter will make a gain, the son will make a loss and the executor will make neither a loss nor a gain.

B. The daughter will make a gain, the executor and the son will make neither a loss nor a gain.

C. The executor and the daughter will make a gain, the son will make a loss.

D. The executor will make a gain, the daughter and son will make neither a loss nor a gain.

E. The executor and the daughter will make a gain, the son will make neither a loss nor a gain.