Overlap profit

If you are struggling to see the overlap period(s) from your calculation of the assessments in the opening years, then an "easy" technique to compute the overlap profits is: Add up the assessments for the opening tax years where profits fall into more than one tax year's assessment and compare this with The total of the profit figures used in calculating these assessments. The difference between these 2 figures is the overlap profit. Using example 2, Andrew, from Chapter 6 of the course notes you will see that the total of the assessments in the first 3 years where the overlaps occur = 15,000+65,000+70,000 = 150,000. 2 profits (30,000 and 70,000) that total 100,000 have been used to establish these assessments. Therefore 150,000 - 100,000 = 50,000 overlap profits In example 3, Chris, the total amount assessed in the first 2 tax years where the overlap profits arise is 46,000 (22,000 + 24,000) and one profit of 36,000 has been used in computing these assessments. 46,000 - 36,000 = 10,000 overlap profits. Hope this helps