(a) as at the time when a * scheme is entered into, or a later time, an entity (the prospective losing entity ) has * provided, is providing, is to provide, or might provide, one or more economic benefits * in connection with the scheme; and
(b) the prospective losing entity is a company or trust (except one listed in section 727- 125 (about superannuation entities)); and
(c) a * realisation event happens to an * equity or loan interest, or to an * indirect equity or loan interest, in the prospective losing entity at a time when no * IVS time for the scheme has yet happened (whether or not one happens later); and
(d) apart from this Division, a loss would be * realised for income tax purposes by the realisation event; and
(e) because of section 727- 855, the scheme results in a * presumed indirect value shift affecting the realisation event; and
(f) section 727-860 (about prospective gaining entities) is satisfied; and
(g) no exclusion in Subdivision 727-C applies to the presumed indirect value shift because of section 727- 865; and
(h) on the assumptions set out in subsection 727-865(3), the interest would be an * affected interest in the prospective losing entity;
the loss is reduced by an amount that is reasonable having regard to a reasonable estimate of the amount (if any) by which the scheme has reduced the interest's * market value during the period that ends at the time of the realisation event and started at the later of:
(i) when the scheme was entered into; and
(j) the time of the last realisation event that happened to the interest.
Note 1: This Subdivision does not reduce gains from realisation events, but loss reductions under this Subdivision are taken into account in working out:
• gain reductions under Subdivision 727-G for interests in a gaining entity that are realised after the IVS time for the scheme (see section 727- 625); or
• uplifts under Subdivision 727-H in the adjustable values of interests in a gaining entity (see section 727- 810).
Note 2: Section 727- 865 provides for how other provisions of this Division apply for the purposes of this Subdivision.
Further exclusion for certain 95% services indirect value shifts
(2) The loss is not reduced if the * presumed indirect value shift is a * 95% services indirect value shift because of subsection 727-865(2), unless:
(a) the conditions in section 727- 705 (as applying because of that subsection) are met for the presumed indirect value shift; or
(b) the conditions in section 727-710, 727-715 or 727-720 (as applying because of that subsection) are met for the presumed indirect value shift and for the realisation event.