June 04 mgmt127a

June 04 mgmt127a - June 4, 2008 MGMT 127A All gains are...

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June 4, 2008 MGMT 127A All gains are capital, unless they are inventory or receivables. Those are ordinary. Section 1231 Business long-term assets. Property, plant equipment. When you have ordinary income, every dollar is taxed. When you have an ordinary loss, it’s always deducted, there is no limit. With capital gains, there is a limit of $3,000, the net capital loss. If you had a choice to classify $100,000 of income as ordinary or capital, you would choose capital because of the cheaper rates. If you had a big loss, would you prefer it to be ordinary or capital. You would prefer it to be ordinary because if it was capital you could only take $3,000 of loss. The most important investment people can make for the economy is improving their property plant equipment. Creates efficiency, job, and international competitiveness. Section 1231 gives the best of both worlds. Section 1231 gains and losses, you take all of your gains and all of your losses and net them together. Section 1231 is a holding tank. If your transactions are a section 1231 gain, net gains are treated as LTCG If your transactions are a section 1231 net loss, they are considered to be ordinary losses Capital unless inventory or business receivables or property plant equipment. ALTERNATIVE MINIMUM TAX
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June 04 mgmt127a - June 4, 2008 MGMT 127A All gains are...

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