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

Info iconThis preview shows pages 1–3. Sign up to view the full content.

View Full Document Right Arrow Icon
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
Background image of page 1

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

View Full DocumentRight Arrow Icon
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
Background image of page 2
Image of page 3
This is the end of the preview. Sign up to access the rest of the document.

Page1 / 5

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

This preview shows document pages 1 - 3. Sign up to view the full document.

View Full Document Right Arrow Icon
Ask a homework question - tutors are online