Commentary on Sections Overview Overview Section 184: Basis of valuation of work in progress
750.This section sets out the main rules for the valuation of work in progress. It is based on section 100(1) of ICTA.
751.Subsection (1) applies if the work in progress is transferred to a person carrying on a profession or vocation. In that case, it is valued at the sale price.
752.There are no alternatives to the sale price. So there is no need for a rule (such as that in section 180 for stock) about the tax cost to the purchaser of the work in progress. The cost is always the price paid.
753.Subsection (2) applies if the work in progress is not transferred to a person carrying on a profession or vocation. In that case, it is valued at an arm’s length price. As explained in the commentary on section 177, this Chapter retains the distinction between this basis of valuation and open market value.