{[ promptMessage ]}

Bookmark it

{[ promptMessage ]}


Chap.7.Property_Acquisition - Federal Income Taxation...

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

View Full Document Right Arrow Icon
Federal Income Taxation CHAPTER 6 PROPERTY ACQUISITION & COST RECOVERY Property Classification Personalty vs realty Personal use vs business/investment use Tangible vs intangible ADJUSTED [TAX] BASIS equals cost or initial basis plus capital additions & improvements less capital cost recovery allowances. Capital cost recoveries include: tax deductions from depreciation, amortization, depletion, exempt income, losses. What is a "capital addition or improvement" versus a repair or maintenance expense? Per the regulations, expenditures that add value to the property are capital; expenditures that do not extend the life of the property, but merely maintain or preserve the property are repairs. INVENTORY Two issues: what is included in inventory cost & how assigned to CGS. Uniform Capitalization Rules are explicit rules re: what must be included in inventory "cost." Includes all direct costs of manufacturing, purchasing, & storing inventory, and any indirect costs that benefit or are incurred because of production or resale. See text for list of expenses that should be included (in part) in inventory cost under unicap rules. Result of unicap rules is that inventory costs under tax law can differ from GAAP. This will result in a temporary difference between financial net income and taxable income.
Background image of page 1

Info iconThis 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.

{[ snackBarMessage ]}