Taxes: Lesson One Property Taxation

Question 1

All assets are capital assets except

Answer 1

ACID:
Accounts/ notes receivable, copyrights and creative works , inventory, and depreciable property used in a trade or business

Question 2

Single taxpayers may exclude up to how

Much of gain from the sale of their principal residence

Answer 2

$250,000

Question 3

For married taxpayers filing jointly may exclude up to how

Much from the sale of their principal residence?

Answer 3

$500,000 but
Must meet both the use requirement and not have utilized the exclusion within the last two years but either may meet the ownership requirement.

Question 4

Ownership requirement

Answer 4

The property must have been owned and occupied as a principal residence for 2 out of the last 5 years.

Question 5

Never gift or sell an asset to a related party when the donor’s basis is greater than the FMV of the asset.

Answer 5

Section 267 disallows losses from direct or indirect sales or exchanges of property between related parties. Applies to losses ONLY.
Include siblings (half not step), lineal descendants (children/ grandchildren), ancestors (parents and grandparents), spouse 
Related parties don’t include: in-laws, aunts/uncles, or cousins. Example on pg 20 on prestudy

Question 6

Section 1231

Answer 6

Is a depreciable or real property used in a trade or business held greater than one year

Question 7

Section 1245

Answer 7

Property that is or has been subject to an allowance for depreciation or amortization. It’s tangible personalty used I. Trade or business and includes depreciable property, patents, copyrights, and other intangibles.