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37 Cards in this Set
- Front
- Back
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Holding period on gift properties |
If carry over basis, HP of the prior owner |
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Capital gain distributions from a mutual fund |
must be reported as LONG TERM capital gain regardless of how long the stock has been owned |
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holding period of property (general rule) |
from the date AFTER it was acquired to the date it is disposed of |
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sale of stock or securities (Gains/Losses) |
realized on the TRADE date rather than the SETTLEMENT date |
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Return of capital distribution |
- reduces basis and becomes a capital gain when basis = 0 - FIFO is used when specific identification is impossible |
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Capital losses |
negative taxable income for up to $3,000/TY ($1,500 if MFJ) |
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Section 1244 Stock |
- sale can be deducted as ordinary losses (up to $50k/TY or $100/TY if MFJ - contribution to capital cannot be > $1 million |
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Depreciable business property |
NOT a capital asset - Gains: capital gains |
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Basis of property |
- Increased by capital expenditures - Decreased by capital returns |
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5-year properties |
- Automobiles - Computers - Furniture in rental homes - Appliances - Office machinery - Carpets |
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7-year properties |
- Office furniture - Agricultural machinery/equipment - Any property that doesn't have a class life |
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Depreciation of RESIDENTIAL real property |
- 80% or more of rental gross income comes from dwelling units - Recovery period of 27.5 years |
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Depreciation of NONRESIDENTIAL real property Section 1250 |
- Recovery period is 39 years |
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Contributed property to corporation |
- No gain or loss recognized - Stock basis is increased |
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Distribution of dividends (E&P) |
- Taxable - Do NOT reduce basis |
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Stock rights |
- are stocks acquired in a nontaxable distribution - basis is allocated portion of the older stock - if < 15% of FMV of old stock, basis is ZERO |
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Casualty losses (basis) |
Reduced by the amount of the casualty loss |
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Debt discharge (basis) |
- Excluded from gross income. - Reduction in basis is required for amounts excluded |
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Credit on asset purchases (basis) |
reduce basis of the property |
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Personal use converted to business use (basis for depreciation) |
the lesser of FMV on the date of conversion or AB |
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Gift (Holding Period) |
For gain: donor's acquisition For loss: donee's acquisition |
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Inheritance (Holding Period) |
Automatic LT |
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Securities (Holding Period) |
Trading date |
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Short sale (Ss) (Holding Period) |
Earlier of Ss closing or property sale date |
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Capital gain dividend (Holding Period) |
Automatic LT |
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Gain/Loss Recognition (Calculation) |
Money Received (or to be received) + FMV of other property received + Liability relief - Money or other property given up - Selling expenses - Liabilities assumed ------------------------------------------------------ = Amount realized - Adjusted basis ------------------------------ = Gain (loss) realized |
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Net Capital Gain (NCG) |
LTCG — STCL
Net STCG is not included in NCG (treated as ordinary gain)
BUT Net STCG may be offset by net LTCL |
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Capital Gain Rates (individuals) |
0% - 10% - 15% income tax brackets 15% - 25%, 28%, 33%, 35% regular tax bracket 20% - 39.6% tax bracket 25% - LTCG depreciable real ppty (1245 ppty) 28% - collectibles and certain small business stock (1202 stock) |
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Capital Gain Rates (Corporations) |
taxed at the corporation's regular tax rate |
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Liabilities discharged in bankruptcy |
STCL regardless of how long the debt was in possession of the debt |
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UNDISTRIBUTED capital gains |
taxed as capital gains in the current year |
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60/40 rule |
- regulated future contracts, foreign currency contracts, nonequity options, dealer equity options treated as sold ON THE LAST DAY of the year. - gains or losses treated as if they were 60% LT and 40% ST w/o regard of holding period. |
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1202 Stock and 1244 Stock (Qualified Small Business - QSB) |
- 50% exclusion gain/sale on QSB stock - held for > 5 years, issued after 8/10/1993 - 75% exclusion, 1202 stock issued after 2/17/2009 and before 9/28/2010 - 100% exclusion, 1202 stock acquired after 9/27/2010 |
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What is a qualified Small Business (QSB) Stock? |
stock of a domestic C corporation with aggregate gross assets not > $50 million |
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1202 QSB stock |
$10 million OR 10x adjusted basis Taxed at 28% rate |
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Rollover on capital gains from sale of 1202 stock |
new QSB stock must be purchased w/in 60 days |
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Loss from sale of 1244 stock |
deducted as ordinary loss capital contribution cannot be > $1 million Max. loss deductible $50k or $100k MFJ Losses from investments w/o receiving stock are not eligible for excludable |
