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25 Cards in this Set
- Front
- Back
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Real Property |
Land or Buildings Land and all items permanently affixed tot he land |
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Personal Property |
Machinery, Equipment, and Automobiles All property not classified as real property |
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Capital Assets |
property held by taxpayer (real or personal) - personal automobile of individaul taxpayer - furniture fixtures in the home of individual taxpayer - stocks and security of all types (except held by dealers) - personal property of taxpayer not used in trade or business - interest in a partnership - goodwill of a corporation - copyrights, etc. that have been purchased - other assets held for investment |
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Noncapital Assets |
- Property normally included in inventory or held for sale to customers in ordinary course of business - Depreciate property and other real estate (section 1231) - Accounts and notes receivable from sale or services in business - copyrights, etc. held by the original artist - Treasury stock |
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Gain or loss calculation |
Amount Realized - Adjusted basis of assets sold = gain or loss |
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Amount Realized |
- Cash received (boot) - Assumption of debt by buyer (excess = boot) - Property received at farir market value - Service received at fair market value - The amount realized is reduced by any selling expenses |
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Adjusted Basis for assets sold |
Purchased property basis = cost Gift property basis = rollover cost/ NBV Inherited property basis = Step Up(Down) FMV |
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Purchased property basis |
Cost of property + improvements (betterment or restoration, or new or different use) - Accumulated Depreciation Spread adjustments (think of stock dividends) |
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Gifted property basis for gain/loss purposes |
Rollover cost basis/NBV Exception - Lower FMV at date of gift (depends on future selling price) Holding period - assumes the donors holding period |
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Inherited Property Basis |
Step Up(down) to FMV Generally date of death becomes Basis Alternative (Max 6 months) - distribution date of asset or alternative valuation date (earlier of 6 months after death or date of distribution/sale) Holding period - automatically considered to be long term |
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Gains |
"HIDE IT" Boot = cash or COD (cancellation of debt) |
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Gains - Homeowner's Exclusion |
sale of taxpayer personal residence $500,000 filling jointly $250,000 for single, filling separately, or head of household - principal place of residence for 2 or more years out of 5 (dont need to be continuous) - Either spouse can meet ownership requirement, but both spouses have to meet the use requirement, otherwise eligible spouse can claim $250,000 - Nonqualified use is not eligible for the exclusion. - partial exclusion for change of employment resulting in move (months lived/24) - no age requirement - no rollover to another house - exclusion is renewable |
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Gains - Involuntary Conversions |
Destruction, theft, condemnation results in nonrecognition of gain if the tax pay reinvests the involuntarily received proceeds, gain is recognized on the extent of the unreinvested amount.
- No gain recognized on direct conversion on similar property, basis of new asset is basis of old asset + any additional investments - Personal Property: the investment must occur within two years of year end (federally declared disaster = four years) Business Property = 3 years from year end Gain - recognized when amount received exceeds cost of replacement (basis is cost - gain) - if gain is over 100,000 then it does not qualify as replacement property
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Gains - Divorce Property Settlement |
lump sum payment or property settlement |
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Gains - Exchange of Like-Kind Business/Investment Assets (tangible) |
Nonrecognition treatment is accorded to "Like-Kind" exchanges of property used in trade or business or held for investment - does not include inventory, stock, securities, partnership interest, real property in different countries) Gain when boot received (lower of boot or realized gain) Basis = FMV of like-kind property received - deferred gain + deferred loss |
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Gain - Installment Sales |
Recognize when cash is received (annual cash collections * gross profit percentage) Gross profit = sale - cost of goods sold Gross profit percentage = gross profit/sales Earned Revenue = cash collection * gross profit % |
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Gain - Treasury and capital stock transaction (by corporation) |
exempt from gain - Sale of stock - Repurchase of stock by corporation - Reissue of stock |
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Losses |
WRaP Nondeductible |
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Losses - Wash Sale Loss |
Security is sold for a loss and is repurchased with 30 days before or after the sale date Repurchase basis = basis of old security less proceeds of sale + purchase price of new security Date of acquisition of purchase security is same as old secuirty |
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Losses - Relate Party Transactions |
are not considered arms length transactions Related parties: - Brothers and sisters - Husband and wife - lineal descendatns - Entities that are more than 50% owned by individuals, corporations, trusts, and or partnerships Capital losses are disallowed even if made at arms length Basis rules - same as gift tax rules Loss is only recognized when the future sales price is lower than the acquiring relatives FMV Holding period restarts Personal Loss - no deduction is allowed for the loss on a nonbusiness disposal or loss. AN itemized deduction may be available in the category of casualty and theft |
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Losses - Personal Loss: Individual Capital Gain Rules |
Net capital Gains Rules Long Term - Holding period more than 1 year - Tax rate 20% max, 15% for lower tax rates, and 0% for taxpayers in the 10-15% tax bracket Short Term - Holding period less than 1 year - treated as ordinary income |
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Losses - Personal Loss: Individual Capital Loss Rules |
$3,000 maximum deduction Carried forward forever but cant be carried backwards |
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Losses - Personal Losses: Corporation Capital Gains |
No specific lower tax rate Net capital gains of corporation are added back to ordinary income and taxed at the regular tax rate Section 1231 gains are entitle to capital gain treatment |
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Losses - Personal Losses: Corporation Capital Gains |
May not deduct from ordinary income Carried back 3 years and forward 5 years Deducted from capital or section 231 gains |
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Depreciation |
MACRS |
