Misc Tax Issues Flashcards
Related Party Transactions
Related Party:
- member of family
- business where taxpayer holds more than 50% ownership
Gains Taxable - losses disallowed (until related party sells item to unrelated party)
Using Suspended Loss:
Realized Gain - gain in sale
Recognized Gain - can be offset by the suspended loss when purchased
– Basis becomes cost paid plus disallowed loss - holding does not transfer with related party sale
Wash Sale
Only for Securities
- prevent investors from recognizing artificial losses by selling for loss then repurchasing same security
– “substantially similar securities”
- 61 days includes trade plus 30 days before and 30 days after
Collectibles Property Taxation
LTCG @ 15%
Capital Gains Tax Table
- 1-$77,200 = 0%
- $77,200 - 479K = 15%
- Over $479K - 20%
Collectibles - artwork, antiques purchased for investment purposes (stamps, gold and silver)
- subject to max 28% rather than 15 or 20
- if ordinary tax rate is less than the 28%, use the lower ordinary tax rate
Rental Property Recapture
25% on Net Capital Gains for Straight-Line Depreciation
Unrecaptured Section 1250 Gain
Obamacare Tax 3.8%
Tax on Weathy to pay for Obamacare
3.8% modified AGI is 250K MFL or 200 HH or single
- applies to the lesser of “net investment income” or excess of AGI over AGI threshold
1. find if you are over AGI
2. is amount of over AGI more than investment income?
3. Add extra 3.8% tax to the lower of the 2
Section 1244 Small Business Stock Sales
- ordinary loss on sale of worthless corp stock
- more than $3000 can be deducted in current year the stock becomes worthless
- up to $50,000 deduction per year ($100K MFJ) PLUS 3,000 Capital Loss
- excess carries over as capital loss
Worthless:
- Corp must have total capitalization of $1,000,000 or less
- only for original stockholder, partnership or individual.
- common and preferred share are eligible for loss treatment
