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8 Cards in this Set
- Front
- Back
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Capital Gains & Losses
C. Gain excluded or not currently recognized (deferred) if you can <HIDE IT> |
A gain is not taxed if the taxpayer can "HIDE IT" all.
Gain to the extent of boot (the part the taxpayer did not "HIDE IT") is taxable. 1 . Homeowner's Exclusion 2 . Involuntary Conversions a. No Gain Recognized b. Personal Property (two years from year-end) c. Business Property (three years from year-end) d. Gain Recognized (boot) e.Loss Recognized 3 . Divorced Property Settlement. 4. Exchange of Like-Kind Business/ investment Assets (tangible) 5 . Installment Sale |
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HIDE IT
1 . Homeowner's Exclusion |
The sale of the taxpayer's personal (primary or principal) residence is subject to an exclusion from gross income for gain :
a . $500,000 i s available to married couples fil ing a joint return and certain surviving spouses. b. $250,000 is available for single, married filing separately, and head of household. To qualify: 1-Taxpayer must have owned and used property as a principal residence for two years or more d u ring the five-year period 2-no age requ irement to receive the exclusion 3-No rollover to another house is required . 4-The exclusion is renewable |
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HIDE IT
2 . Involuntary Conversions |
a. No Gain Recognized
b. Personal Property (two years from year-end) c. Business Property (three years from year-end) d. Gain Recognized (boot) Example : (insurance rcvd = 450 / old building Adj Basis = 400 / new building = 440 ). Answer: if he re-invest the full 450 .so NO GAIN recognized,"",,but because he re-invest PARTIAL amount 440 so GAIN is only10= boot recognized not 50. e. Loss Recognized |
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HIDE IT
3 . Divorced Property Settlement |
Remember :
Alimony ---- Taxable Child Support --------Free (Property Settlement ------ FREE ) non taxable to the receiver & Non-deductible to the giver. |
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HIDE IT
4 . Exchange of Like-Kind Business/ investment Assets (tangible) |
a. Gain recognized ONLY When Boot Rcvd
b. Basis Rules : 1. Gain/Loss REALIZED = Amount Realized - Adjusted Basis of Auto Given Up = (FM Asset Rcvd + Boot rcvd) - (cost Asset Given - Acc Depr.) 2. Gain/Loss RECOGNIZED =The Lesser of ( Realized Gain ) or ( Boot Rcvd) 3. Basis of New Property = Adjusted Basis of Asset Given + Gain Recognized - <Boot Rec'd> + Boot Paid |
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HIDE IT
5 . Installment Sale |
a. Gain recognize ONLY When Cash Is Rcvd
b. Reportable Installment Sale Gain/Income |
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Capital Gains & Losses
D. Losses is (non-deductible) - if <WRAP> |
Losses is (non-deductible) - if:
1 . Wash Sale Loss 2 . Related Party Transactions 3 . And.... 4 . Personal Loss |
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Capital Gains & Losses
E. Individual Capital (Gain) and (Loss) Rules |
E. Individual NET Capital (GAIN)Rules :
a. Long-term a. short-term c. Un-recaptured Section 1250 Gain (25% rate group) d. Collectibles and Small Business Stock (28% rate group) E. Individual NET Capital (LOSS) Rules : a. $3,000 Maximum Deduction b. Limitation - to taxable income c. Excess Net Capital Loss - Carry forward an unlimited time until exhausted ( Note: Corporation Capital loss is 3 /5) d. A Personal (Non-Business) Bad Debt -short-term capital loss e. Worthless Stock and Securities -treated as a capital loss |
