Please enable JavaScript.

Coggle requires JavaScript to display documents.

Tax Final (Property Transactions: Determination of Gain/ Loss & Basis…

- - - - losses are limited to offsetting gains + $300 of capital losses of year
        
        excess capital losses carry over until used (if die- they go to estate)
    - - gains are taxed at long-term capital gain rates
      - losses are ordinary
  - - - amount realized-adjusted basis= realized gain(loss)
      - amount realized= selling price- cost of disposition
      - adjusted basis= cost + capital additions- cost recovery
      - all realized gains are recognized unless a specific tax provision provides otherwise
      - realized losses may or may not be recognized depending on circumstances ==> not deductible
        
        losses on the sale or disposition of personal use property are not recognized
      - once recognized gains or losses have been determined, they must be classified as ordinary or capital
        
        ordinary gains are fully taxable
        
        ordinary losses are fully deductible
      - capital gains and losses are subject to special tax treatment
  - - - losses on these assets are not deductible
    - - net gains and losses by holding period
      - if excess losses result, they are shifted to the category carrying the highest tax rate
      - long term tax rates: use the maximum
  - - - group by name;
    - - group by governmentform;
    - - (select name, headofstate, governmentform from country
      - group by name) sqa
      - join
      - (select name, headofstate, governmentform from country
      - group by governmentform) sqb
      - on sqa.name=sqb.name;
    - - (select name, headofstate, governmentform from country
      - group by name) sqa
      - join
      - (select name, headofstate, governmentform,population from country
      - group by governmentform) sqb
      - on sqa.name=sqb.name;
    - - select sqa.name, sqb.governmentform, sqb.headofstate, sqb.population from
      - (select name, headofstate, governmentform from country
      - group by name) sqa
      - join
      - (select name, headofstate, governmentform,population from country
      - group by governmentform) sqb
      - on sqa.name=sqb.name;
    - - group by headofstate
        
        having count(name) > 1;
    - - group by governmentform;
    - - (select headofstate, count(name) as 'Count of Gov' from caha3791gov1
      - group by headofstate
        
        having count(name) > 1) sw1
      - join
      - ( select name, headofstate, governmentform from caha3791gov1
        
        group by governmentform) sw2
        
        on sw1.headofstate=sw2.headofstate;
    - - (select headofstate, count(name) as 'Countgov' from caha3791gov1
      - group by headofstate
        
        having count(name) > 1) sw1
      - join
      - ( select name, headofstate, governmentform from caha3791gov1
        
        group by governmentform) sw2
        
        on sw1.headofstate=sw2.headofstate;
  - - - excess capital losses are carried over to the next tax year
      - when carried over, they retain their classification
  - - - realized gains may be deferred or excluded
      - realized losses may be deferred or disallowed
  - - - bargain amount may be income to purchaser (employee = compensation; shareholder= dividend)
    - - must allocate basis to each asset obtained
      - allocation usually based on relative FMV of assets
    - - assign purchase price to assets (excluding goodwill) to extent of their total FMV
      - then allocate among assets based on FMV
      - residual amount is goodwill (amortizable Sec. 179 asset)
      - allocation applies to both purchaser and seller
    - - basis of original shares is allocated over original and new shares
      - holding period includes the holding period of the original shares
    - - may have a dual basis; basis for gain and loss may differ
      - basis is dependent on relationship between FMV at the date of gift and donor's adjusted basis
      - dual basis: when FMV < donor's basis
      - if FMV > donor's basis use the carryover basis
      - for subsequent gain
        
        when a gifted asset is disposed of by the donee; the basis for calculating any gain is donor's adjusted basis ==> carryover
        
        called gain basis
        
        may be increased if donor incurred gift tax on gift
        
        holding period for donee includes that of donor
      - for subsequent loss
        
        disposal, basis for calculating any loss is the lesser of FMV at the date of gift or donor's adjusted basis
        
        called loss basis
      - if dual basis and sold for a loss, holding period for the donee starts on the date of gift
      - when there is no gain or loss
        
        no gain or loss is realized
      - holding period determines long vs. short gain or loss
      - adjustment for gift taxes
        
        proportion of gift tax paid (gifts after 1976) by the donor on appreciation of asset can be added to the basis of donee
        
        donee's basis is equal to: donor's basis + [(unrealized application/ taxable gift)] * gift tax]
    - - FMV of the asset at decendent's date of death
        
        exception: executor of estate elects alternative valuation date (=FMV)
      - inherited property is always treated as long-term property
      - step-up [in basis]: cost and FMV; never taxed
      - valuation date
        
        date assets valued for estate tax is either
        
        1) date of death
        
        2) 6 months after date of death
        
        can only be elected if both value of gross estate and the estate tax liability lower than if PVD was used
        
        when PVD is used, beneficiary's basis will be the earliest of:
        
        1.) date asset is distributed from estate
        
        2.) 6 months after date of death
        
        property inherited by taxpayer (spouse) which was both appreciated and gifted by same taxpayer to dependent within 1 year of dependent's death
        
        beneficiary's basis in property is carryover of decendent's basis (not date of death FMV)
        
        disallows step-up in basis
        
        survivor's share of community property
        
        both dependent's share and surviving spouse's share of community property receives basis of FMV on date
        
        surviving spouse's share deemed to be acquired from dependent
        
        common law state: only 1/2 of jointly held property of spouses is included in the estate
        
        no adjustment of the basis is permitted for excluded property interest (surviving spouse share)
  - - - losses on sale of assets between related parties are disallowed
      - for income producing property, any loss disallowed can be used to gain recognition on subsequent disposition of asset to unrelated party
        
        only available to original transferee
        
        not available for sales of personal use taxes
      - include: family members, corporation, and shareholder owns >50% (direct or indirect) of corporation partnership >50%
    - - only applies to losses
      - losses from wash sales are disallowed
      - occurs when taxpayer disposes of stock or securities at a loss and acquires substantially identical stock or securities within 30 days before or after the date of loss sale
      - disallowed loss is added to the basis of the substantially identical stock or securities that caused the disallowance
      - does not apply to gains realized on the disposition of securities
    - - loss on the disposition of personal use assets is disallowed
      - personal use asset cannot be converted into a business use deductible loss
      - original loss basis for an asset is the lower of personal use basis or FMV at date of conversion
      - cost recovery basis similarly limited
- - - - inventory, securities, partnership interests do not qualify
      - if real estate is acquired or produced for resale, it is inventory and does not qualify
  - - - new property must be identified within 45 days of date old property was transferred
      - new property must be received by earlier of
        
        within 180 days of date old property was transferred
        
        due date (including extensions) for tax return covering year of transfer
      - deadlines are strictly applied
  - - - ) boot received (FMV)
      - gain realized
    - - FMV of new asset - Gain not recognized + loss not recognized
      - basis in boot received is FMV of property
  - - - voluntary act by taxpayer is not an involuntary conversion
    - - replacement property must be similar or related in service or use as involuntarily converted property
      - must be acquired within a specified time period
    - - taxpayer use test properties must be used by the owner in similar endeavors
      - functional use test property must have the same use to the owner as the converted property
    - - taxpayer normally has a 2 year period after the close of the taxable year in which gain is realized to replace the property (always be more than 2 years from conversion
      - replacement time period starts when involuntary conversion or threat of condemnation occurs
      - replacement time period ends 2 years (3years for condemnation of realty) after the close of taxable year where income is recognized
    - - direct conversion if taxpayer receives property as compensation instead of money
      - involuntary conversion rules mandatory
      - basis and holding period in replacement property same as converted property
      - indirect conversion rules elective
        
        gain is recognized to extent amount realized exceeds investment in replacement property
        
        basis in holding property is its costs less deferred gain
        
        holding period includes that of converted property
    - - losses related to business properties are recognized
      - personal use asset condemnation losses are not recognized and are not postponed