{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}

Example_gain_loss_1231_Solutions

Example_gain_loss_1231_Solutions - 460,000 1231 gain...

Info icon This preview shows pages 1–2. Sign up to view the full content.

View Full Document Right Arrow Icon
HA 4422 Chapter 11 Realized gain/loss Sale 1,000,000 Adjusted Basis -500000 (Cost 700,000 less depreciation 200,000) Realized 500000 Recognized 500000 Ordinary Inventory, Accounts Receivable Section 1231 Trade or business Real or depreciable Held > 12 months Capital Not above or something made by the taxpayer (or gifted to taxpayers by creator) Gross sales Price Cash plus FMV of property plus FMV of services plus Expenses paid by purchaser plus Seller's Debt assumed Treat like you got more cash less Expenses paid by seller less Buyers debt paid by seller Treat like you paid more Example: I sell something 500,000 Cash 50,000 FMV of car 10,000 Purchaser pays the real estate taxes I owed 200,000 Seller assumes my mortgage Sales price 760,000 The building was used in my business Cost 500000 Depreciation -200000 Adjusted basis 300000 gain
Image of page 1

Info icon This preview has intentionally blurred sections. Sign up to view the full version.

View Full Document Right Arrow Icon
Image of page 2
This is the end of the preview. Sign up to access the rest of the document.

Unformatted text preview: 460,000 1231 gain General rules: 1231 gains = capital 1231 losses = ordinary #1 recapture gains to the extent of depreciation taken If personal property 1245 200000 Recapture to extent of depreciation as ordinary 260,000 Remainder is capital Unrecaptured 1250 If real 1250 200,000 Recapture to extent of depreciation as ordinary but a maximum 25% rate 260,000 Remainder is capital #2 Net casualty gain/loss Net loss is ordinary Net gain combines with net 1231 gain/loss #3 Combine net casualty gain with Net 1231 gain/loss Net loss is ordinary Net gain have to lookback #4 Lookback I had 1231 losses: Year 1 Year 2 Year 3 100,000 100000 Ordinary gain Year 4 10,000 10,000 Ordinary gain Year 5 Year 6 sale 150,000 remainder is capital gain...
View Full Document

{[ snackBarMessage ]}

What students are saying

  • Left Quote Icon

    As a current student on this bumpy collegiate pathway, I stumbled upon Course Hero, where I can find study resources for nearly all my courses, get online help from tutors 24/7, and even share my old projects, papers, and lecture notes with other students.

    Student Picture

    Kiran Temple University Fox School of Business ‘17, Course Hero Intern

  • Left Quote Icon

    I cannot even describe how much Course Hero helped me this summer. It’s truly become something I can always rely on and help me. In the end, I was not only able to survive summer classes, but I was able to thrive thanks to Course Hero.

    Student Picture

    Dana University of Pennsylvania ‘17, Course Hero Intern

  • Left Quote Icon

    The ability to access any university’s resources through Course Hero proved invaluable in my case. I was behind on Tulane coursework and actually used UCLA’s materials to help me move forward and get everything together on time.

    Student Picture

    Jill Tulane University ‘16, Course Hero Intern