REG 4.0 Flashcards
(17 cards)
- Gifting basis?
* Inheritance basis?
- Gifting = Lesser of NBV (FMV of property (would be the exception)
- Inheritance = FMV
- How are capital gains and losses treated within an estate or trust?
- Explain De Minimis Rule?
*Capital gains and losses are classified as principal and must remain with the estate or trust to be taxed at the estate or trust level
- Applicable financial statement to deduct for tax purposes max $5,000 each
- No financial statement line item max is $500
- Property which gains not taxed? HIDE IT
* Property nondeductible losses? WRaP
*Homeowner exclusion
Involuntary conversions
Divorced property settlement
Exchange of like-kind business/invest asset
Installment sale
Treasury and capital stock transactions
*Wash sales loss (don’t forget to add the disallowed loss)
Related party transactions
and
Personal loss
- What is real property?
* Related party transactions how are losses and gains treated?
- Land and everything permanently attached to it
* Losses are disallowed on most related party sales transactions
*Rules for short term capital gains and losses?
- Short term losses (include short term loss carryover) offset against short term gains ORDINARY INCOME RATE
- Remain short term loss offset long term capital gains (i.e. collectibles) 28%
- Remain short term loss offset long term gains (i.e. section 1250 gains) 25%
- Remain short term loss used to offset long term gains 15%
- Long term capital losses (include carry loss carryover) offset w/ gains from long term 28% group, 25% group, 15% group
- Name a few capital assets?
* Installment method how to calculate profit?
- Property held by the taxpayer for investment such as:
- *automobile
- *stocks
- *land held for investment
*Sold 600 Basis 420 (500-80dep) = 180 gain,
received 120 in year, 180 / 600 = 30%, 30% of 120 = 36 ANSWER
*Like Kind Business Exchanges for G/L?
Realized?
Recognized?
Tax Basis?
- Tangible real prop
- Used in trade or business
- Held for Invest (except inventory, stock, securities)
*Realized
(FMV of item received) + (Boot received), + Liability Relief, - (Boot Paid), - (Adjusted basis item given up (Basis - Dep)
**Net reduction in mortgage debt is like boot received (+)
- Recognized
- Lesser gain realized or boot received
- *Net reduction also applies here if mortgage relief
*Tax Basis
-FMV of property received - Def G + Def L
or (Be sure to net realized and recognized amounts 3 realized 2.5 .5 Def G)
-Adjusted basis of property given up + gain recognized - boot received + boot paid (exact opposite)
**Recognized loss never recognized in like kind exchanges
- What are section 1231 assets?
* What is expenses deduction 179
- Depreciable personal property used in the taxpayers trade or business and held for over twelve months
- Net gain overall = treat net amount as long term capital gain
- Net loss overall = treat as ordinary loss
- Not to exceed 2,010,000 of personal property used in trade or business may be deducted in 1 year. Every amount over deduct from max
- Max 500,000
- What is half year convention
- What is mid quarter
- What is mid month
- All PERSONAL PROPERTY (machinery and equipment)
- 6 month depreciation taken in year of buy and disposal
- All PERSONAL PROPERTY (machinery and equipment) NOT REAL PROPERTY
- Greater 40% property placed in service during last 3 months
- REAL PROPERTY (27.5 residential RE, 39 nonresidental)
- Treated as place in service middle of month of acquisition
- Half month depreciation taken when placed in service
- Half month depreciation taken when disposed of
- Tax treatment given to section 1245 gains?
- Tax treatment given to section 1250 gains?
- Tax treatment given to section 291 rule for corporations?
- Up to depreciation ordinary income tax, over 1231 gains (machinery and equip)
- Accelerated depreciation in excess of st line recaptured at ordinary income tax, remaining at 25%, remaining gain 1231 (real prop)
- 20% of lesser of gain on sale or accumulated depreciation, over 1231 gains (real prop)
- Partnership taxation how are the following treated?
- Liabilities
- Cash received
- Land received
- Services performed
- Liabilities % SUB for assumed by other partners otherwise Liabilities % ADD to basis if assumed by incoming partner (i.e. put in a land with a mortgage to the partnership)
- Cash distribution subtract
- Distribution of non cash property takes partnership basis, if greater take own basis
- Services performed treated at FMV
- Treatment of partnership non liquidating distributions of partnership property?
- A partnership does not ordinarily recognize income on a nonliquidating partnership distribution of property other than money T/F?
- If FV of property differs from basis on partnership formation how treated?
- Lesser of the basis in the land or remaining basis in the partnership
- True
- The amount of the unrealized gain or loss at the date of the contribution is specifically allocated to the contributing partner upon the sale of that contributed property
- Non Liquidations / Liquidations
- Basis used
- Stopping point
*What does accumulated E and P affect?
-Non liquidating, NBV, stop a zero
- Liquidating, Partnership interest, Zero out account
- *Complete liquidation would recognize gain only to the extent that money is received
- Distribution of cash is a subtraction
- Only affect taxability of dividends paid to shareholders and not gain calculations
*When dealing with exchanges companies cannot deal in their our securities T/F?
*T not gain or loss would be recorded for dealing in own securities
*Wash sale how determined?
- When sold for a loss
- Within 30 days
- Basis of repurchased security = security price + disallowed loss
- Involuntary Conversion?
- Gain
Insurance 195 Cost, Adj Basis old 75, New Build 167
*Gain = Insurance received - orig cost 195-75 =120
- Recog Gain = Insurance proceeds - Cost new build 195-167=28
- Basis of Replace Prop = New Build - Gain not Recog (Gain - Recog Gain) 167 - 92 (120-28=92) = 75
- When is filing deadline for estate after the death?
* Unified Estate and Gift Credit?
*9 Months after decedents death
- Credit 2,125,800 = tax before credits, on $5,450,000 tentative tax base at death
- 40% x (tax base at death - 5,450,000) - CREDIT 2,125,800
