(1) This section affects how to work out the total gain reductions and the total loss reductions for the purposes of section 727- 625 if:

(a) a * realisation event covered by that section happens to an * equity or loan interest, or to an * indirect equity or loan interest, in the * losing entity or in the * gaining entity; and

(b) the interest is also * trading stock or a * revenue asset at the time of the event.

(2) In the case of an * equity or loan interest, or an * indirect equity or loan interest, in the * losing entity that is * trading stock at that time:

(a) the amount (if any) by which section 727- 615 or 727-850 reduces a loss worked out under section 977- 25 or 977-30 (about realisation events for trading stock) that would, apart from this Division, be * realised for income tax purposes by the event is taken into account; and

(b) the amount (if any) by which section 727- 615 or 727-850
reduces a loss worked out under section 977-10 (about realisation events
for CGT assets) that would, apart from this Division, be
* realised for income tax purposes by the event is *not *taken into account;

in working out the total loss reductions.

(3) In the case of an * affected interest in the * gaining entity that is * trading stock at that time:

(a) the amount (if any) by which section 727- 620 reduces a gain worked out under section 977- 35 or 977-40 (about realisation events for trading stock) that would, apart from this Division, be * realised for income tax purposes by the event is taken into account; and

(b) the amount (if any) by which section 727- 620 reduces a gain
worked out under section 977-15 (about realisation events for CGT assets)
that would, apart from this Division, be
* realised for income tax purposes by the event is *not *taken into account;

in working out the total gain reductions.

(4) In the case of an * equity or loan interest, or an * indirect equity or loan interest, in the * losing entity that is a * revenue asset at that time, the greater of the following is taken into account in working out the total loss reductions:

(a) the amount (if any) by which section 727- 615 or 727-850 reduces a loss worked out under section 977- 55 (about realisation events for revenue assets) that would, apart from this Division, be * realised for income tax purposes by the event;

(b) the amount (if any) by which section 727- 615 or 727-850 reduces a loss worked out under section 977-10 (about realisation events for CGT assets) that would, apart from this Division, be * realised for income tax purposes by the event.

(5) In the case of an * affected interest in the * gaining entity that is a * revenue asset at that time, the greater of the following amounts is taken into account in working out the total gain reductions:

(a) the amount (if any) by which section 727- 620 reduces a gain worked out under section 977- 55 (about realisation events for revenue assets) that would, apart from this Division, be * realised for income tax purposes by the event;

(b) the amount (if any) by which section 727- 620 reduces a gain worked out under section 977-15 (about realisation events for CGT assets) that would, apart from this Division, be * realised for income tax purposes by the event.