Essay about Case 24 Inner City Paint Corporation
Ordinary assets are: 1) Stock in trade of the taxpayer or other properties of a kind which would properly be included in the inventory of the taxpayer 2) Property held by the taxpayer primarily for sale to customers in the ordinary course of his trade or business. 3) Property used in the trade or business and subject to depreciation 4) Real property used in trade or business 2. The concept of capital assets.
Capital Assets include all property held by the taxpayer whether or not connected in trade or business but not including those enumerated above as ordinary assets. 3. The importance of knowing whether an asset is capital or ordinary.
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12. Ordinary Gain * It is the gain derived from the sale or exchange of ordinary assets. 13. Ordinary Loss * It is the excess of the expenses or losses over the income of the taxpayer excluding capital gains and capital losses; or the loss incurred from the sale or exchange of ordinary assets.
14. The Requisites for the recognition of capital gain or loss 1. The transaction must involve property classified as capital assets; and 2. The transaction must be a sale or exchange or one considered as equivalent to a sale or exchange. 15. Kinds of Capital Assets 1. Short-term one which has been held by the individual taxpayer for 12 months or less 2. Long-term one which has been held by the individual taxpayer for more than 12 months 16. The rules on the Recognition of Capital Gains or losses from the disposition of personal property classified as capital asset where the taxpayer is an individual 1. The percentages of gain or loss to be taken into account shall be the following: a. 100% if the capital asset has been held 12 months or less b. 50% if the capital asset has been held for more than 12 months 2. Capital losses shall be deducted only to the extent of the capital