Tax_Ch.14 - Ch 14 Property Transactions Basis Determination...

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Ch. 14 – Property Transactions: Basis Determination and Recognition of Gain or Loss Introduction Gross Income includes gains from dealings in property.  Dealing in property includes: sales, exchanges, other types of acquisitions or dispositions of property Sales or other disposition is any transaction where a taxpayer realized benefit in exchange for property Any gain or loss must be recognized unless provision of Internal Revenue Code say it’s excluded Gain is offset against losses for the yr, or included in the computation of taxable income Losses on sales of personal used items are NOT TAX DEDUCTIBLE Determining Gain or Loss Amt realized in a property transaction is a measure of the consideration received.  It represents the economic value of realized by the taxpayer.  Computing Gain or Loss Realized                                Amt realized               ($$$ received) -  Adjusted Basis                             =     Gain or Loss Realized         Computing Amount Realized     cash received from sale  +  FMV of other property received  +  Debt assumed by buyer  –  New debt assumed from property received  –  Selling expenses
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Amt realized also includes debt obligations of the buyer. If the contract provides for inadequate interest or no  interest, then interest must be imputed and the sales price reduced according o If Amt Realized received is  cash + notes payable or debt with interest
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This note was uploaded on 06/18/2008 for the course ACCTG 321 taught by Professor Will during the Spring '08 term at San Diego State.

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Tax_Ch.14 - Ch 14 Property Transactions Basis Determination...

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