Special provisions apply when a capital asset is transferred intra-group that was either trading stock in the hands of the transferor or becomes trading stock in the hands of the transferee, as follows:
| Transaction | Treatment |
| Capital asset in hands of transferor but becomes a trading asset in hands of transferee | Transferor company will transfer the asset under the no gain/no loss provisions and the transferee company will immediately appropriate the asset to its trading stock (at market value) [See Note 1 below]. |
| Trading asset in hands of transferor but becomes a capital asset in hands of transferee | Transferor company is deemed to appropriate the asset (at market value) to non-trade use and then have transferred it under the no gain/no loss provisions to the transferee company. |
| Note 1. Although in certain situations an election may be made for the appropriation to take place at a no gain/no loss price. (See D2.415 regarding the restriction of pre-entry capital losses where the election relates to an asset brought into a group of companies by |
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