## Block of Assets: Tax Treatment in the Terminal Year
Under the WDV (Written Down Value) method used for Income Tax, assets are grouped into a block. The terminal-year treatment depends on whether the block continues or ceases to exist after the asset is sold.
### Core Rule
Treatment depends on whether the block consists of one asset or several assets.
| Block survives? | Depreciation in terminal year | Tax effect | |
|---|---|---|---|
| Case 1 (one asset) | No, ceases | None | STCL or STCG arises |
| Case 2 (multiple assets) | Yes | Charged | Tax benefit via depreciation |
### Case 1 - Single Asset (block ceases)
No depreciation in terminal year.
```
STCL/STCG = WDV at beginning of year - Sale value
```
- WDV > Sale -> Short-Term Capital Loss -> tax benefit = STCL x rate
- Sale > WDV -> Short-Term Capital Gain -> tax outflow = STCG x rate
### Case 2 - Multiple Assets (block survives)
Depreciation charged on reduced WDV:
```
Depreciation = (WDV at beginning - Sale value) x dep. rate
Tax benefit = Depreciation x tax rate
```
Caveat: if Sale value > WDV at beginning, no depreciation can be charged in Case 2 either.