Chapter_11_Handout_Notes - HA 4422 Chapter 11 Property...

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HA 4422 Chapter 11 Property Dispositions Figure 11-1 Realized vs. Recognized Recognized – need to classify Ordinary Section 1231 Capital (Table 11-1) Gross Sales Price Generally is the agreed upon price In an arm’s length transaction = FMV of property If FMV is not evident = cash received, plus FMV of property and services received, plus sellers expenses paid by buyer, plus sellers debt assumed, less buyers expenses paid by the seller, less buyers debt assumed by seller. Assumption of Debt Treat as if you paid more cash Relief of Debt Treat as if you received more cash
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Capital Assets Not inventory Not accounts receivable Not real or depreciable property used in a trade or business (Section 1231) Not something created by the taxpayers or given to the taxpayers by the creator Exhibit 11-2 Net capital gains/losses Holding period > 12 months = long-term Exception for qualified small business stock gain (1/2 excluded and use 28% rate = 14% tax) Securities Basis of stock: use specific identification or FIFO
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Chapter_11_Handout_Notes - HA 4422 Chapter 11 Property...

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