Reading...
Play button
Play button
Use LEFT and RIGHT arrow keys to navigate between flashcards;
Use UP and DOWN arrow keys to flip the card;
H to show hint;
A reads text to speech;
3 Cards in this Set
- Front
- Back
|
What are capital gains?
|
Gain from sale or exchange of a capital asset. Sec. 1222.
|
|
|
What are capital assets
|
Sec. 1221 defines them as any property held by the taxpayer, with a series of exceptions:
I. Exceptions restricting income conversion: a) Inventory /stock in trade / held primarily for sale to customers in b) Creative works (e.g., literary or artistic property) held by its creator (e.g., material subject to copyright, letters, memos) c) Accounts or notes receivable received in the ordinary course of trade or business (4) d) Commodities derivatives financial instruments held by dealers in them (6) e) Supplies regularly consumed in the ordinary course of trade or business (8) (* this doesn’t exactly fit the category) II. Exceptions limiting cheats a) No hedging cheats (reference to Regs) (7) b) US gov’t publications received at lower cost than public (5) III. §1231/‘Quasi-capital assets’: (a) property used in a trade or business to which §167 depreciation applies and (b) “real property used in a trade or business”). [If this property is held for > 1 year it is subject to even more favorable treatment in §1231!]. See below for details. |
|
|
What is Sec. 1231 property?
|
(a) property used in a trade or business to which §167 depreciation applies and (b) “real property used in a trade or business”). [If this property is held for > 1 year it is subject to even more favorable treatment in §1231!]. See below for details.
|
