Property Transactions

Question 1

what is the basis of property received from a decedent through inheritance

Answer 1

the fair market value of the property at the date of death

Question 2

gain basis

Answer 2

the donors adjusted basis

Question 3

loss basis

Answer 3

the lower of fair market value or the adjusted basis

Question 4

if an asset is sold at a price in between the gain and loss basis, what is the gain/loss on the sale?

Answer 4

nothing is recognized

Question 5

alternate valuation date

Answer 5

the basis of property becomes its fair market value on the date that is six months after the date of death

Question 6

Code Section 1231 assets

Answer 6

inventory, accounts receivable and depreciable property or real estate used in business (held for over 1 year)

Question 7

Capital assets

Answer 7

any property held by a taxpayer, property held for investment use and personal use. Does not include inventory, A/R, or depreciable property or real estate used in business

Question 8

If an individual has a net capital loss, how much can they deduct per year?

Answer 8

3,000 (deduction for AGI and is limited to taxable income - any excess loss carries forward)

Question 9

how can corp use a net capital loss?

Answer 9

only to offset a net capital gain

Question 10

how can a corp net cap loss be carried?

Answer 10

Back 3 year and forward 5 years (treated as short term)

Question 11

what happens when section 1231 gains exceed section 1231 losses

Answer 11

long term capital gain (subject to a lookback limit for losses during the previous 5 years)

Question 12

Section 1231 losses are considered

Answer 12

ordinary losses

Question 13

lookback provisions

Answer 13

net section 1231 gains must be offset by sec 1231 losses from the preceding 5 tax years that have not previously been recaptured. (to the extent of these losses, the gain is treated as ordinary income)

Question 14

tangible assets that are used in a trade or business and owned for one year or less are:

Answer 14

ordinary assets

Question 15

what is taxed at 25%

Answer 15

gain on the sale of realty to the extent of straight-line depreciation claimed on the asset

Question 16

what amount of gain does a taxpayer recognize when they sell their principal residence?

Answer 16

If it is their personal residence where they have resided 2 of the last 5 years, they do not have to recognize up to $250k of gain as an individual or $500k as married