The gain or loss resulting from the disposal of an asset is the difference between the compensation received for the asset and its cost base.

No gain or loss on the disposal of a depreciable asset is taken into account other than what is stated in Article 17 of this Law.

In determining taxable income, a natural person may not take into account the gain or loss on the disposal of an asset that is not for use in the activity.

The cost base of an asset purchased, produced, manufactured, or constructed by a taxpayer itself is the amount paid or incurred by the taxpayer in cash or in kind in the process of acquiring the asset.

Where a taxpayer disposes of part of an asset, the cost base of the asset is apportioned between the part retained and the part disposed of in accordance with their market value at the time the asset was purchased.

Expenses incurred to alter or improve a non-depreciable asset are added to the cost base of the asset.

The value of compensation for the disposal of an asset against assets in kind is based on the market value of those assets in kind , including exemption from the debt on the asset.

Where a taxpayer disposes of an asset by way of gift or inheritance, the disposer is treated as having received compensation equal to the market value of the asset at the time of disposal, unless paragraph (i) of this Article is applicable.

If the disposed of asset is encumbered by debt exceeding its market value, the taxpayer disposing of the asset is treated as having received compensation equal to the value of such debt.

In determining the tax base, no gain or loss is taken into account on the involuntary disposal of an asset to the extent that the compensation value is used in purchasing an asset of the same kind within one year of the involuntary disposal.

The cost base of the replacement asset described in paragraph (j) of this Article is determined with reference to the cost base of the replaced asset.

Where an asset owned by a taxpayer is converted to personal use or otherwise ceases to be used in the generation of income, the taxpayer is deemed to have disposed of the asset for its market value, with the recognition of the resulting gain but not the loss.

[To determine the tax base of a capital company or a corporation among a group of capital companies fully owned, directly or indirectly, by the said capital company, no profit or loss will be calculated upon the transfer of an asset between the capital company and any of the companies of the group or among those companies; and no profit or loss will be calculated for the companies to which assets are transferred. In all cases, for non-computation of profit or loss, it is required that the asset should not be disposed of to a company outside the group prior to the lapse of two years from the date of transfer.

The cost base is determined as follows: