Flashcards in Transactions in Property Deck (17):
original cost or other basis of property increased by capital improvements and reduced by depreciation losses.
Cash or other property not permitted to be received tax-free in certain nontaxable transactions.
Gain recognized due to receipt of boot = lesser of FMV of boot or amount of realized gain
Generally all assets except inventory, notes and accounts receivable, and depreciable and non depreciable property used in a trade or business. (Property held for investment or personal use)
*loss not recognized on personal use assets (gain is still recognized)
when money or other property is received for property that has been destroyed, damaged, stolen or condemned. Recognized gain can generally be deferred if proceeds are reinvested in similar property
exchange of property for property of a like kind (excludes inventory, stocks, partnership interests, etc) generally no gain recognized unless boot is received
Long-term capital gain or loss
gain or loss realized from the sale or exchange of a capital asset held for more than one year
generally no loss can be recognized from the sale or exchange of property between related taxpayers, and may be taxed as ordinary income
depreciable or non-depreciable property used in a trade or business and held for more than one year (excluding inventory, AR, US gov publications, copyrights, literary, musical or artistic compositions)
*losses are ordinary, gains are long-term capital (unless recaptured against prior 5 year's 1231 ordinary losses)
depreciable personal property used in a trade or business or held for production of income (examples: machinery, equipment, trucks)
gain from sale or exchange of 1245 property must be reported as ordinary income to the extent of the lesser of (1) all depreciation, or recognized gain
any real property (except 1245 property) that is subject to the allowance of depreciation
gain from sale or exchange of 1250 property must be reported as ordinary income to the extent that actual depreciation deductions exceeded what straight-line would have been.
If held for 12 months or less, gain on 1250 is recaptured as ordinary income to the extent of all depreciation.
loss from the sale of stock or securities is disallowed because the taxpayer, within 30 days before or after sale, has acquired stock or securities that are substantially identical to those sold
Basis in Gifted Property
to calculate a gain, basis = donor's cost + gift tax paid
to calculate a loss, basis = lesser of FMV or donor's cost + gift tax paid
additional basis for gift tax limited to:
gift tax x FMV-cost/FMV-exclusion ($14,000)
holding period will depend on which basis is appropriate
Basis in Inherited Property
FMV at date of death, or alternative date if elected (generally 6-months after death)
Deemed to be long-term
Qualified Small Business Stock
capital gains are 50% excludable if held for more than 5 years and acquired before 2009; 75% if before Sept 2010 and 100% if before 2014.
must have been acquired directly at original issuance
C-corp with $50 or less capitalization.
Eligible exclusion limited to greater of $10 mill or 10 times the investors stock basis