180730 Chapter 10 Slides.ppt - Chapter 10 Property...

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Chapter 10Property Transactions: Determination of Basis and Gains and Losses©2013 CCH. All Rights Reserved.4025 W. Peterson Ave.Chicago, IL 60646-6085800 248 3248CCHGroup.com
General Rule
3Determination of Gain or Loss The gain or loss formula:Amount Realized- Adjusted Basis------------------= Realized Gain/LossIs it recognized?
Steps to Compute Gain/Loss on Property Dispositions1.Determine the Amount Realized (AR): Cash + other
2.Determine the Adjusted Basis (AB): Purchase price as
3.Compute the Gain/Loss: AR - AB4.Is the Gain/Loss Recognized?: In other words, is the gain taxable or is the loss deductible? This depends entirely on
5.If recognized, determine the Holding Period: More or less than one year?
Basis and Adjusted BasisCash paid+Cost of capitalized improvements+Buying expenses, including commissions, legal, title search, surveys and appraisal fees paid at date of original purchase_Depreciation (allowable depreciation reduces basis, even if not taken)Deductible loss on partial destruction casualties+AB of boot given+Capital gain on partial destructioncasualties+Any interim recognized gains=Adjusted basis

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