Part 12Accrued income profits
Chapter 2Accrued income profits and losses
Special rules about some calculations
660Transfers with unrealised interest: interest in default
1
This section applies if—
a
securities are transferred with unrealised interest,
b
there has been a failure to pay interest due on the securities transferred, and
c
as a result of the failure, on the day of the transfer the value of the right to receive the unrealised interest (“the unrealised interest value”) is less than the unrealised interest.
2
The amount of the payment treated as made to the transferor under section 634(2) is taken to be the unrealised interest value instead of the amount of the unrealised interest.
3
The amount of accrued income profits under section 631(1) is taken to be the unrealised interest value instead of the amount of the unrealised interest.
4
Subsections (2) and (3) are subject to section 661 (successive transfers with unrealised interest in default).
5
For the purposes of this section and section 661, a person is treated as transferring securities of a particular kind which the person acquired later before securities of that kind acquired earlier.
6
See also section 681 (exemption for unrealised interest received by transferee after transfer).